If you invest in gold ETF or silver ETF, the start of September will be important. Market regulator SEBI has revised the trading regime for ETFs. The new rules will come into force from September 1, 2026. The aim is to keep ETF prices close to their true asset values and improve trading for investors.
The current system uses the T-2 net asset value (NAV) of two trading days prior to determine the ETF’s price band on the stock exchange. This often results in a discrepancy between the ETF’s market price and the underlying asset value. In the new rules, SEBI has provided for the latest reference price. Depending on the ETF category, the previous day’s closing NAV or other real-time valuation may be used. This is expected to reduce the discrepancy between price and underlying value.
Currently, most ETFs have a fixed price band of up to 20%. This will change under the new system. The price band will be dynamic depending on the nature and volatility of the asset that the ETF tracks. This can help ETF prices adjust more effectively during sudden market changes.
SEBI has also decided to introduce a system of pre-open call auctions for commodity ETFs. This can particularly affect gold and silver ETFs. Global gold and silver prices can fluctuate overnight, so this system can help determine better prices before the market opens. The new rules are expected to keep ETF prices close to their actual asset values. This can reduce the risk of trading at a significant premium or discount to NAV, and improve liquidity and price discovery.