SEBI Proposes New Rules for Gold, Silver ETFs to Curb Volatility

• SEBI aims to curb extreme volatility in gold and silver Exchange Traded Funds (ETFs) by proposing changes to the base price and price band framework.
• Current framework lacks separate price bands for ETFs aligned with underlying assets, making them vulnerable to sharp price movements.
• The proposal follows significant volatility, with ETFs experiencing over 15% swings due to global commodity price fluctuations.
• SEBI proposes determining the base price using T-1 day closing price, NAV, or average indicative NAV, addressing issues with the current T-2 day closing NAV method.
• New price bands: 10% for equity/debt ETFs (flex up to 20%) and 6% for gold/silver ETFs (flex up to 20%), both with 15-minute cooling-off periods.