SEBI introduces pre‑open auctions and dynamic bands for gold, silver ETFs from Sep 1
New Delhi, June 19
The Securities and Exchange Board of India 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.
— IANS
Reader Comments
I invest in gold ETFs for my daughter's wedding fund. The new rules make sense but I'm slightly worried about the ±6% dynamic band – what if there's a sudden global crash? Will the cooling-off period be enough to prevent panic selling? Hope SEBI monitors this closely.
This is exactly what we needed! As a small investor, I always found gold ETF pricing confusing – sometimes premium was 5% over NAV, next day discount 3%. Now at least prices will reflect global markets in real time. SEBI finally doing something right for commodity markets. 👏
As someone who works in finance, this is a welcome move. The T-2 NAV system was archaic – no wonder Indian gold ETFs traded at huge discounts to international prices. The pre-open auction will improve liquidity too. But SEBI should have done this years ago, not just now.
One concern: what about silver ETFs? They're less liquid than gold. Dynamic bands might lead to wider spreads for silver. Also, the VWAP calculation using last 30 minutes could be manipulated by big players. Hope SEBI has thought about these nuances. Otherwise, good direction.
My father used to hold physical gold but I convinced him to switch to ETFs last year. This new framework gives me confidence to recommend ETFs to others. Transparency plus better price discovery – exactly what Indian markets need. Gold is in our culture, now investing in it digitally becomes easier. 🇮🇳
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