SEBI Reviews ETF Pricing Rules Following Gold, Silver Swings

India’s market regulator, the Securities and Exchange Board of India (SEBI), has proposed fresh measures to curb rising volatility in the exchange-traded fund (ETF) space. In a consultation paper released on February 13, 2026, the capital market regulator said it will review the base price mechanism and price band framework for ETFs and has invited public feedback on the proposals. If implemented, the changes could significantly reshape the ETF segment.

Current Price Band Framework

At present, most securities traded under the rolling settlement mechanism are subject to scrip-wise price bands of up to 20% on either side. However, this does not apply to stocks that have derivative products available.

Additionally, restrictive price bands are imposed on securities placed under enhanced surveillance measures. On a broader level, market-wide circuit breakers of 10%, 15%, and 20% are triggered based on movements in either the BSE Sensex or the NSE Nifty 50, whichever breaches the threshold first.

Concerns Over Recent Volatility

SEBI highlighted the sharp fluctuations witnessed in late January 2026, particularly in gold and silver prices across domestic and international markets. According to the regulator, the existing ETF price bands, linked to the T-2 day Net Asset Value (NAV), proved insufficient during this period. This gap led to misalignment between ETF market prices and the value of their underlying assets.

As an interim corrective step, exchanges adopted the T-1 day closing NAV or closing price as the base price for gold and silver ETFs. This adjustment was feasible due to a holiday between T-1 and T day, allowing more recent pricing data to be used.

Proposed Changes to ETF Price Bands

To strengthen safeguards against extreme volatility, SEBI has outlined the following proposals:

For Equity and Debt ETFs:

• Initial price band of ±10%
• Flexibility to extend the band up to ±20%
• A mandatory 15-minute cooling-off period after a breach
• A maximum of two band expansions (flexes) per trading day

Also Read: BSE Set to Roll Out Monthly Futures, Options on Focused Midcap Index

For Gold and Silver ETFs:

• Initial price band of ±6%
• Expandable up to ±20%
• 15-minute cooling-off period after each breach

These measures are aimed at ensuring that ETF prices remain better aligned with their underlying assets while maintaining orderly market conditions.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.