SEBI introduces new Gold ETF trading framework with dynamic price bands from 1 September; check details

Fri June 19 2026

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 market participants.

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, Gold and Silver ETFs 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. SEBI 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 ETF ecosystem 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.

Source: https://www.livemint.com/