SEBI introduces pre-open auctions and dynamic bands for gold, silver ETFs from Sep 1
The Securities and Exchange Board of India (SEBI) on Friday announced a revised trading framework for gold and silver exchange-traded funds effective September 1, to tighten price discovery, boost transparency and investor protection.
The new framework aims to ensure that ETF prices stay closer to the value of the assets they track and better align domestic commodity ETF pricing with global markets, the regulator said.
Under the new rules, commodity ETFs such as gold and silver funds will open each session with a pre-open call auction and trade within dynamic price bands to reflect overnight movements in global commodity markets immediately.
The dynamic price bands will be set initially at ±6 per cent around the reference price and the bands can be expanded further in 3 per cent increments after a cooling-off period. Unlike the current system, there will be no upper limit on how many times the band can be widened during a session.
The market regulator also said that the previous day's closing price, calculated using the last 30 minutes' volume-weighted average price (VWAP), will serve as the reference point for the ETF base prices from September.
If trade has not occured in the last 30 minutes, the day's last traded price will be used. If trade has not happened on the day before the trading day, the latest available NAV will be used. SEBI plans to shift to one day before the trading day closing NAV as the base price from April 1, 2027.
The move will help reduce sharp premiums and discounts during volatile markets and changing market dynamics. Currently, stock exchanges use the ETF's Net Asset Value (NAV) from two trading days earlier (T-2) to determine the base price for applying price bands.
