Sebi proposes changes to ETF base price, price band rules

India's markets regulator on Monday proposed changes to how exchange-traded funds are priced for trading, seeking to narrow the gap between an ETF's base price and the value of its underlying assets.

Here are some key details:

* The Securities and Exchange ‌Board ⁠of India ⁠said the base price used to set trading limits would ​be based on the volume-weighted average closing price in the last 30 ​minutes of the previous trading session


* If the ETF did not trade in that 30-minute window, the base ​price would be the last ⁠traded price ‌from the previous session. If there was no ​trade in ​the ETF during the session, the base ⁠price would be based on the latest available ​net asset value

* SEBI also proposed dynamic price bands for equity and debt ETFs, with an initial limit of plus or minus 10% that could be widened to plus or minus 20% after a cooling-off period

* In February, SEBI had proposed using ‌the previous trading day's indicative net asset value to calculate ETF price bands and replacing fixed limits with dynamic bands

* ⁠For silver and gold ETFs, which track commodities traded continuously in international markets, SEBI proposed a call auction to help ​determine an equilibrium price before trading begins

* The regulator had previously proposed removing the fixed bands entirely for silver and gold ETFs, with limits instead aligned with daily price limits applicable for derivatives contracts.