SEBI Update: Proposed SIM Binding Mechanism to Prevent Unauthorised Access

The capital market regulator, the Securities and Exchange Board of India (SEBI) has proposed implementing a SIM binding mechanism in order to prevent unauthorised access to trading and demat accounts, similar to the security measures used in Unified Payments Interface (UPI) transactions.

The proposal further stated that the system ensures that a unique client code (UCC) can only be accessed through the device linked to the SIM, reflecting the security protocols found in UPI apps.

How SIM Binding Mechanism Work?

Under this proposal, traders will only be able to log in to their accounts if the trading app recognises both the UCC and the SIM associated with the mobile device. This approach will create a more secure and robust authentication process for logging into mobile trading apps, allowing investors to track all active sessions on other devices. As with UPI-based payments, trading apps will recognize the UCC, SIM, and mobile device details to ensure that only authorised devices can access the account.

For added security, biometric authentication will be required on the primary SIM and device. A QR code-based authentication system, sensitive to proximity and time, will be used for logging into other devices like desktops and laptops. This is similar to how many social media platforms manage multiple logins.

SEBI has also proposed a fallback mechanism to address situations where the primary device is lost or replaced, ensuring uninterrupted access to the account. A single mobile device can be linked to multiple UCCs of family members using the same number, as long as they are authorized.

Applicable to 10 Largest Brokers

Initially, the framework will apply to the top 10 largest brokers and will gradually extend to all stock brokers. Investors will have the option to opt into this enhanced security authentication system. This proposal responds to concerns over unauthorized access, SIM spoofing, incorrect share transfers, and other security issues in trading accounts. SEBI aims to address these challenges by introducing a more secure authentication process.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.