The Securities and Exchange Board of India has issued new trading and settlement norms for exchange traded funds, replacing the current T-2 day net asset value based reference price with a market price based approach from September 1, 2026. The circular sets new rules for ETF base price determination, price bands, pre-open call auctions and close-out procedures, aimed at reducing the one day lag in ETF pricing and aligning trading limits more closely with the movement of the underlying assets. For base price, ETFs will initially use the T-1 day closing price, defined as the last 30 minutes volume weighted average price, with fallbacks to the last traded price if there was no trade in the last 30 minutes and to the latest available closing NAV if there was no trade on T-1. Equity ETFs and debt ETFs, other than overnight and liquid ETFs, will move to dynamic price bands with an initial 10% band that can be expanded in 5% steps up to 20% after cooling-off periods. Overnight ETFs and liquid ETFs will retain a fixed 5% band. Gold and silver commodity ETFs will have a dynamic 6% initial band that can be widened in 3% stages, with additional relaxation permitted where international market moves exceed the aggregate 9% daily price limit, and with no upper or lower cap and no limit on the number of intraday flexes. SEBI also introduced a pre-open call auction for gold and silver commodity ETFs using the same mechanism as for other scrips, and set a specific close-out formula for overnight and liquid ETFs based on the higher of the highest traded price in the relevant period or 5% above the latest available closing price on the day auction offers are called. Stock exchanges and asset management companies are expected to resolve operational issues so that T-1 day closing NAV can become the ETF base price from April 1, 2027. Market infrastructure institutions must update systems, amend relevant rules where needed and notify market participants before the September 1, 2026 implementation date.
Securities & Exchange Board of India2026-06-15
Securities and Exchange Board of India revises ETF base price and price band rules and introduces pre open call auctions for commodity ETFs
The Securities and Exchange Board of India has overhauled exchange traded fund trading norms, effective September 1, 2026, by shifting the base price from T-2 day NAV to a T-1 market price measure and by introducing new price band rules by ETF type. Equity and most debt ETFs will move to dynamic bands, overnight and liquid ETFs will keep a fixed 5% band, and gold and silver commodity ETFs will get dynamic bands plus a pre-open call auction. SEBI also set a new close-out formula for overnight and liquid ETFs and plans a further move to T-1 closing NAV as base price from April 1, 2027.