SEBI has given investors and stock exchanges more time to prepare for its new exchange-traded fund (ETF) trading rules.
The Securities and Exchange Board of India has extended the implementation date by one week, and the new rules will now come into effect from September 7.
Earlier, these changes were scheduled to take effect from September 1.
The new framework covers important areas such as ETF base prices, price bands, pre-open call auctions and the close-out process.
What Are the New ETF Trading Rules?
SEBI introduced the new ETF trading framework through a circular issued in June. The aim is to make ETF trading rules clearer and more consistent across stock exchanges.
One important change relates to call auctions during the pre-open session. In a call auction, investors can place buy and sell orders during a fixed period.
These orders are then matched at a price that allows the maximum number of transactions to take place.
SEBI has also introduced rules for the close-out process. This process will be used in situations where trade-related obligations cannot be completed through the normal settlement system.
How Will the ETF Base Price Be Decided?
Under the new rules, the previous trading day’s closing price will generally be used as the base price for deciding the ETF’s price band.
This closing price will be based on the volume-weighted average price, or VWAP, during the last 30 minutes of trading.
If the ETF is not traded during the final 30 minutes of the previous trading day, its Last Traded Price (LTP) for that day will be considered the base price.
If there was no trading in the ETF at all on the previous day, the latest available closing Net Asset Value (NAV) will be used instead.
The base price will also be adjusted whenever there is a relevant corporate action.
Another Change Planned From April 2027
SEBI has said that stock exchanges and mutual fund companies will work towards a system where the previous day’s closing NAV can be used as the base price.
This system is expected to be implemented from April 1, 2027.
Why Is SEBI Changing ETF Trading Rules?
ETFs are traded on stock exchanges just like shares, but they can track or hold different types of assets, including stocks, bonds and commodities.
Because of this structure, ETF trading requires clear rules for pricing, settlement and order handling.
The new framework is designed to bring greater clarity and consistency to ETF trading, particularly in areas such as price bands, pre-open sessions, base-price calculation and the close-out process.
For ETF investors, the key date to remember is September 7, when the new trading rules are scheduled to come into effect.
