SEBI Proposes Major Overhaul for ETF Pricing and Price Bands

• SEBI proposes a comprehensive review of base price determination and price bands for Exchange Traded Funds (ETFs) due to volatility alignment and operational gaps.
• The regulator suggests shifting to a T-1-based benchmark for ETF base prices, addressing the current one-day lag and manual adjustment issues.
• SEBI proposes rationalizing the uniform ±20% price band, introducing differentiated initial bands: ±10% for equity/debt ETFs and ±6% for gold/silver ETFs.
• The proposed changes aim to better align ETF prices with underlying assets, especially after heightened volatility in gold and silver prices.
• SEBI seeks public comments on removing the ±20% upper cap for commodity ETFs and introducing a separate pre-open session for commodity-based ETFs for better price discovery.