The sharp movement of rising prices of gold and silver has also increased volatility in the ETF market. In such a situation, market regulator SEBI is now preparing important changes in the rules of Exchange Traded Fund (ETF) segment. In a consultation paper released on 13 February 2026, the regulator has indicated that the base price and price band of the ETF will be reviewed. If this proposal is implemented, the way trading in gold and silver ETFs may change.
What are the rules now?
At present, a price band of up to 20% on both sides is applicable on most of the shares included in rolling settlement. However, this rule does not apply to derivative shares. Apart from this, market-wide circuit breakers of 10%, 15% and 20% are also implemented, which get activated when either the BSE Sensex or NSE Nifty 50 crosses the prescribed limit. In case of Gold and Silver ETFs, the current price band was based on T-2 day NAV. But this arrangement did not prove to be sufficient during the sharp fluctuations in domestic and global prices of gold and silver in the last week of January 2026. The correlation between the market price and the underlying asset started deteriorating.
What is the new proposal of SEBI?
SEBI has proposed to keep the initial price band for equity and debt ETFs at ±10%. If needed, it can be increased to ±20%. There will be a cooling-off period of 15 minutes before each extension of the band and it can be flexed only a maximum of twice a day. Whereas for Gold and Silver ETFs, it is suggested to keep the initial price band at ±6%. If needed, this can also be increased to ±20%. This will also include a cooling-off period of 15 minutes.
What is the impact on investors’ strategy?
It is possible to control to some extent the sudden sharp rise or fall when new rules are implemented. This can reduce panic trading and reduce the difference between NAV and market price. The move could add stability for long-term investors.
Latest Business News