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SEBI Revises ETF Trading Rules: Key Changes from September 7
Summary
SEBI is changing the way ETFs trade from September 7, 2026. From Commodity ETFs joining the pre-open auction to revised base-price calculations and category-wise price bands, here’s what investors need to know.
SEBI Revises ETF Trading Rules: Key Changes from September 7
The Securities and Exchange Board of India (SEBI) has introduced changes to the trading framework for Exchange Traded Funds (ETFs). The changes cover the determination of ETF base prices, price bands and the introduction of a pre-open call auction mechanism for Commodity ETFs.
The implementation of these provisions, originally scheduled for September 1, 2026, has been extended to September 7, 2026.
The Big Picture: From September 7, 2026, Commodity ETFs, including Gold and Silver ETFs, will participate in the pre-open call auction. SEBI has also revised the methodology for determining ETF base prices and introduced category-wise price bands.
What Changes in the Pre-Open Session?
The pre-open session is the period before regular market trading begins, during which buy and sell orders are collected and an opening price is discovered through a call auction.
Under the revised framework, Commodity ETFs will participate in the pre-open call auction.
The pre-open session runs from 9:00 AM to 9:15 AM. During this period, orders are collected and the opening price is discovered before regular trading begins.
The pre-open process comprises:
- Order Collection: Orders are entered and collected before the opening price is determined.
- Order Matching: Orders are matched at the equilibrium price discovered through the call auction.
- Transition to Regular Trading: Regular market trading begins at 9:15 AM.
Gold and Silver ETFs Join the Pre-Open Session
A key change is that Commodity ETFs, including Gold and Silver ETFs, will participate in the pre-open call auction.
This means orders for these ETFs will be collected during the pre-open session and an opening price will be discovered before regular trading begins.
Other ETF categories will continue to follow their applicable trading mechanism as prescribed by the exchanges.
How Will the ETF Base Price Be Determined?
The base price is used as the reference for determining the applicable price band for an ETF.
Under the revised framework, the base price will be based on the previous trading day's closing price, calculated using the Volume Weighted Average Price (VWAP) of trades during the last 30 minutes of trading.
If there are no trades during the last 30 minutes, the previous trading day's Last Traded Price (LTP) will be used.
If the ETF did not trade on the previous trading day, the latest available closing NAV will be used.
Earlier Methodology: Under the earlier methodology, the base price for applicable ETFs was based on the NAV from two trading days earlier (T-2 NAV).
Revised Price Bands for ETFs
SEBI has introduced category-wise price bands for ETFs. The applicable limits differ across Equity and Debt ETFs, Gold and Silver ETFs, and Liquid and Overnight ETFs.
| ETF Category | Initial Price Band | Widening Provision | Maximum / Fixed Band |
|---|---|---|---|
|
Equity & Debt ETFs Excluding Overnight and Liquid ETFs | ±10% | Can be widened by 5 percentage points after the prescribed cooling-off period, subject to applicable conditions. | Up to ±20% |
| Gold & Silver ETFs | ±6% | Can be widened by 3 percentage points at a time after the prescribed cooling-off period, subject to applicable conditions. | Further widening subject to applicable conditions |
| Liquid & Overnight ETFs | ±5% | No widening provision specified | Fixed at ±5% |
The key takeaway: Different ETF categories will have different initial price bands. Equity and Debt ETFs will start with ±10%, Gold and Silver ETFs with ±6%, while Liquid and Overnight ETFs will have a fixed ±5% band.
How Does the Cooling-Off Period Work?
A cooling-off period applies when an ETF reaches the applicable price band before the band can be widened.
The prescribed cooling-off period is 15 minutes, subject to the applicable provisions.
What Investors Should Know
From September 7, 2026, investors should be aware of the following key changes:
- Commodity ETFs, including Gold and Silver ETFs, will participate in the pre-open call auction.
- The ETF base price will be determined using the previous trading day's closing price, based on the last 30-minute VWAP where available.
- Equity and Debt ETFs, excluding Liquid and Overnight ETFs, will have an initial ±10% price band, with provisions for widening up to ±20%, subject to the prescribed conditions.
- Gold and Silver ETFs will have an initial ±6% price band, with provisions for further widening.
- Liquid and Overnight ETFs will have a fixed ±5% price band.
- A 15-minute cooling-off period will apply before an applicable price band can be widened, subject to the prescribed conditions.