If you invest or trade in ETFs such as Gold ETFs, Silver ETFs, Equity ETFs or Debt ETFs, an important change has come into effect. SEBI’s new ETF trading rules are applicable from September 7, 2026.
The main aim of these rules is to reduce the gap between an ETF’s market price and its actual value, or NAV. This could help investors get a fairer price, especially when markets are highly volatile.
What Was the Problem With the Old ETF Rules?
Earlier, exchanges used the two-day-old NAV, known as T-2 NAV, to decide the base price of an ETF. A common price band of 20% was also used for different types of ETFs.
For example, suppose an ETF’s NAV was ₹100 on Monday. If global markets rose sharply on Tuesday and its actual value increased to ₹125, Wednesday’s base price could still be based on Monday’s ₹100 NAV.
With a 20% price limit, trading could stop at ₹120 even though the ETF’s actual value had already reached ₹125. The new rules are designed to reduce such situations.
3 Major ETF Rules From September 7
SEBI has introduced three important changes to the ETF trading system.
1. New method to decide the base price
The base price will no longer depend on a two-day-old NAV. Instead, it will be based on the volume-weighted average price (VWAP) of the final 30 minutes of the previous trading day.
This means the next day’s trading limits will be linked more closely to the ETF’s recent market price.
2. Different price limits for different ETFs
Equity and Debt ETFs will start with a 10% price band. If the market moves sharply, the limit can gradually increase up to 20% after a 15-minute cooling-off period.
Gold and Silver ETFs will start with a 6% price band. The limit can then increase in steps of 3% without an upper cap.
This is important because gold and silver prices can move significantly in global markets while Indian markets are closed.
Liquid and Overnight ETFs will have a fixed price band of 5% because their prices generally see smaller movements.
3. Pre-open auction for Gold and Silver ETFs
Gold and Silver ETFs will now have a pre-open call auction before regular market trading begins.
This process will use buy and sell orders to determine a more reasonable opening price. It can help prevent one or a few early orders from causing a sharp price movement at market opening.
Another Change Is Coming in 2027
These new ETF rules were initially planned to take effect from September 1, 2026. The implementation date was later moved to September 7 to give stock exchanges more time to prepare their systems.
Another major change is scheduled for April 1, 2027. From that date, the previous day’s closing NAV will be used to determine the base price.
What Should ETF Investors Keep in Mind?
Investors should check the indicative NAV, or iNAV, before buying or selling an ETF. The live iNAV available through the fund house can help investors understand whether an ETF is trading close to its underlying value.
Using a limit order instead of a market order can also be useful, particularly when the market opens or while trading Gold and Silver ETFs. A limit order allows investors to decide the maximum buying price or minimum selling price.
Investors should also not immediately worry if ETF trading is temporarily paused during sharp market movements.
Such cooling-off periods are designed to control extreme price movements and allow the market to find a fairer trading price.
