SEBI revamps gold, silver ETF trading with pre-open auctions from Sep 1
Synopsis
SEBI is overhauling how gold and silver ETFs trade in India — introducing pre-open call auctions and dynamic price bands from 1 September to close the gap between domestic ETF prices and live global commodity markets. The regulator is also replacing the outdated T-2 NAV base price with a VWAP-based previous-day close, with a further tightening to T-1 NAV planned for April 2027.
Key Takeaways
SEBI announced a revised trading framework for gold and silver ETFs on 19 June , effective 1 September .
Pre-open call auctions will be introduced for commodity ETFs to improve price discovery at session open.
Dynamic price bands will start at ±6 per cent and expand in 3 per cent increments with no cap on the number of expansions per session.
The base price will shift from the current T-2 NAV to the previous day's closing VWAP (last 30 minutes) from September.
From 1 April 2027 , SEBI plans to further tighten the reference to the one-day-before-trading-day closing NAV .
The changes aim to reduce premiums and discounts that build up during volatile global commodity market sessions.
The Securities and Exchange Board of India (SEBI) on Friday, 19 June unveiled a revised trading framework for gold and silver exchange-traded funds (ETFs), set to take effect from 1 September, aimed at tightening price discovery, improving transparency, and strengthening investor protection. The overhaul directly addresses a long-standing structural gap: domestic commodity ETF prices drifting from the global markets they are meant to mirror.
Key Changes in the New Framework
Under the revised rules, commodity ETFs — including gold and silver funds — will begin each trading session with a pre-open call auction, a mechanism already used for equity markets. Alongside this, trades will occur within dynamic price bands that immediately reflect overnight movements in global commodity prices, replacing the current system that has been slower to adjust.
The dynamic bands will start at ±6 per cent around the reference price and can be widened in 3 per cent increments after a cooling-off period. Critically, SEBI has removed any ceiling on the number of times the band can be expanded during a single session — a significant departure from existing norms.
How the Reference Price Will Be Set
From September, the base price for ETF price bands will shift to the previous day's closing price, calculated using the volume-weighted average price (VWAP) of the last 30 minutes of trade. If no trades occurred in that window, the day's last traded price will apply. If no trading took place on the day preceding the trading day, the latest available Net Asset Value (NAV) will be used as the reference.
This is a notable upgrade from the current practice, where stock exchanges use the ETF's NAV from two trading days earlier (T-2) to set the base price for bands — a lag that can allow significant premiums or discounts to build up during volatile sessions.
SEBI has also signalled a further refinement: from 1 April 2027, the regulator plans to shift to the one-day-before-trading-day closing NAV as the base price, tightening the reference point further.
Why This Matters for Investors
The practical effect of these changes is a reduction in the sharp premiums and discounts that commodity ETFs can trade at during periods of market stress or rapid global price shifts. When gold or silver prices move sharply overnight — driven by geopolitical events, US Federal Reserve signals, or currency swings — the current T-2 framework leaves domestic ETF prices anchored to stale data, creating arbitrage gaps that retail investors often absorb at a disadvantage.
The introduction of pre-open auctions aligns gold and silver ETFs more closely with the price-setting mechanisms already in place for equities, lending the process greater legitimacy and reducing the scope for distorted opening prices.
What Happens Next
Stock exchanges and fund houses will need to operationalise the new framework ahead of the 1 September deadline. Industry participants are expected to engage with SEBI on implementation specifics in the coming weeks. The April 2027 shift to T-1 NAV-based pricing represents the next scheduled milestone in this phased tightening of commodity ETF market structure.
Point of View
Moving first to VWAP-based previous-day pricing in September and then to T-1 NAV by April 2027, is pragmatic but slow given how quickly global gold and silver prices can move. The unlimited band-expansion provision is the most consequential change: it prevents artificial price ceilings during genuine global shocks, but it also means retail investors in thin-volume ETFs face wider intraday swings. Whether fund houses and exchanges can operationalise this cleanly before the September deadline — particularly the pre-open auction infrastructure — will determine whether the framework delivers on its transparency promise or adds complexity without benefit.
NationPress
6 Aug 2026
Frequently Asked Questions
What changes is SEBI making to gold and silver ETF trading?
SEBI is introducing pre-open call auctions and dynamic price bands for gold and silver ETFs from 1 September. The regulator is also replacing the current T-2 NAV base price with a VWAP-based previous-day closing price to better align domestic ETF pricing with live global commodity markets.
How will the new dynamic price bands work for commodity ETFs?
The bands will be set at ±6 per cent around the reference price at the start of each session. They can be expanded in 3 per cent increments after a cooling-off period, with no upper limit on how many times they can be widened during a trading day.
Why is SEBI changing the base price from T-2 NAV?
The current system uses the ETF's NAV from two trading days earlier to set price bands, which creates a lag that allows sharp premiums or discounts to develop when global gold or silver prices move overnight. The new VWAP-based previous-day close reduces this lag significantly.
What happens if no trades occurred in the last 30 minutes of the previous session?
If no trades occurred in the last 30 minutes, the day's last traded price will be used as the reference. If no trading took place at all on the day before the trading day, the latest available NAV will serve as the base price.
What further changes are planned after September 2025?
SEBI plans to shift the base price to the one-day-before-trading-day closing NAV from 1 April 2027, tightening the reference point further and bringing domestic commodity ETF pricing even closer to real-time global benchmarks.
