The Securities and Exchange Board of India (SEBI) on June 15, 2026, issued the notification regarding the Norms for Base Price, Price Bands, Call Auction in pre-open session and Close-out procedure for Exchange Traded Funds (ETFs).
The following has been stated namely: -
• The base price for ETF price bands will be the T-1 day closing price (last 30-minute VWAP), replacing the current T-2 day NAV-based approach. If unavailable, the Last Traded Price (LTP) or latest NAV will be used. Stock exchanges and mutual funds are required to transition to a T-1 day closing NAV-based system by April 01, 2027.
• Dynamic Price Bands for Equity, Debt and Commodity ETFs
o Equity ETFs and Debt ETFs (excluding Overnight and Liquid ETFs) will have an initial ±10% dynamic price band, which can be expanded up to ±20% after cooling-off periods.
o Commodity ETFs (Gold/Silver) will have an initial ±6% dynamic price band, expandable in stages of 3%, with no cap on the number of expansions in exceptional circumstances.
• Overnight ETFs and Liquid ETFs will continue to have a fixed ±5% price band, reflecting their lower volatility profile.
• To improve price discovery and align ETF prices with movements in international commodity markets, Gold and Silver ETFs will be subject to a pre-open call auction mechanism, similar to that applicable to equity securities.
• Special close-out provisions have been prescribed for Overnight and Liquid ETFs, while existing auction and close-out provisions will continue for other ETFs.
• All Market Infrastructure Institutions (MIIs) must update their systems, amend relevant bye-laws/rules, and inform market participants of the revised framework before implementation.
Effective Date is September 01, 2026.
[Notification No. HO/47/11/11(1)2026-MRD-POD3/I/13804/2026]
