Aspiring investors in Gold and Silver Exchange Traded Funds (ETFs) will see significant changes and improvements in trading starting from 1 September. These changes will take effect as the Securities and Exchange Board of India (SEBI) rolls out a revised ETF framework. The framework is aimed at improving price discovery, enhancing transparency and strengthening investor protection.
These changes will usher in a new era of Gold and Silver Exchange Trading, with commodity ETFs as the central focus. The aim will be to align prices in accordance with global peers. This development will also be a major confidence boost for
The biggest impact will be on commodity ETFs, particularly gold and silver funds, as their prices often fail to reflect overnight movements in global commodity markets immediately. To address this gap, SEBI has introduced a pre-open call auction mechanism and dynamic price bands.
How SEBI’s new Gold ETF framework will work
In the new framework, will begin trading within a price band of ±6%. This band can be expanded and evolved further in 3% 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.
For more information, you can refer to SEBI’s official website and review the postulates of the new framework.
has also worked to revise the methodology for determining ETF base prices. Starting September 2026, the previous day’s closing price, calculated using the last 30 minutes’ volume-weighted average price (VWAP), will serve as the reference point (i.e., the reference price).
This move is expected to be immensely beneficial, as it will help reduce sharp premiums and discounts during volatile markets and changing market dynamics.
Different ETF categories and changes under the new framework
|
ETF Category |
Current Framework |
New Framework (From Sept 1) |
|---|---|---|
| Equity ETFs | Fixed ±10% band | Dynamic bands: start ±10%, expandable to ±20% after cooling-off |
| Debt ETFs | Fixed ±10% band | Same dynamic bands as equity ETFs |
| Liquid ETFs | Fixed ±5% band | Unchanged (±5%) |
| Overnight ETFs | Fixed ±5% band | Unchanged, but close-out norms revised |
| Commodity ETFs | Fixed ±5–10% band | Pre-open auction + dynamic bands starting ±6%, expandable in 3% steps, no cap |
Note: SEBI has revised close-out norms for liquid and overnight ETFs, introducing a new pricing mechanism to ensure fairer settlements and reduce market distortions. These changes will take effect on 1 September 2026.
These reforms are introduced to improve pricing efficiency, increase transparency in the system, boost liquidity and align the nation’s with global standards.
Still, it is essential to keep in mind that even with these changes, Gold ETFs remain best suited for long-term portfolio diversification and wealth creation, rather than short-term trading or time-based risky moves.
How should you plan to invest in these asset classes?
In case you aspire to invest in Silver ETFs or similar associated investment asset classes, you must discuss with a certified financial advisor.