SEBI Introduced Revised Framework for ETFs Effective from September 01, 2026

Current Context: On 15 June 2026, SEBI issued a circular revising the ETF trading & pricing framework, effective September 01, 2026.

• Aim: To improve price discovery, reduce deviations from NAV, and enhance market efficiency.
• Base Price: Shift from T‑2 NAV to previous day’s closing VWAP (last 30 min) to avoid stale pricing.

Dynamic Price Bands:

• Equity/Debt ETFs: ±10% start, expandable to ±20%.
• Gold/Silver ETFs: ±6% start, expandable in stages.
• Overnight/Liquid ETFs: retain tighter fixed bands (±5%).
• Pre‑Open Session: Call auction introduced for Commodity ETFs (Gold/Silver) for better opening price discovery.
• Close‑out Procedures: Revised rules for Overnight & Liquid ETFs.

These reforms aim to keep ETF prices aligned with underlying assets, minimize premiums/discounts, and boost passive investing appeal in India.

Question:

Q.1 Under SEBI's revised ETF framework, what will be used as the base price for ETF trading?
a) Current day's NAV
b) T+1 NAV
c) T-2 NAV
d) Previous day's closing VWAP of the last 30 minutes

Answer: d) SEBI replaced the earlier T-2 NAV-based pricing mechanism with the previous day's closing VWAP (Volume Weighted Average Price) of the last 30 minutes.