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Informist, Monday, Jun. 15, 2026

--SEBI issues circular for norms to compute base price, price bands for ETFs 

MUMBAI – The Securities and Exchange Board of India has issued a circular for norms to compute base price, price bands, and call auction in the pre-open and close-out session for exchange-traded funds. This is done to address the lag of one trading day in the base price of ETFs, according to the SEBI circular. The changes will be applicable from Sept. 1.

Currently, a fixed base price band of 20% is applicable on the base price of ETFs, which is the net asset value of T-2 day of the ETFs. To address the issue, the regulator said the base price for determining price bands should be the closing price of T-1 day, which is the last 30 minutes of volume weighted average price of the ETF. 

In case of no trading in the ETF, during the last 30 minutes, the base price should be the last traded price of the day. Moreover, if there is no trading on T-1 day, then the base price should be the latest available closing net asset value of the ETF. The base price should be adjusted for corporate actions, SEBI said. 

The regulator said the stock exchanges and asset management companies of mutual funds should jointly address the operational challenges to implement the use of T-1 day closing net asset value of the ETFs as the base price.

SEBI recommended using dynamic price bands, with a 10% initial price band, which can be flexed up to 20% after a cooling-off period. The cooling of period should be 15 minutes after trades are executed at or above 9.9% and so on, during which trading should continue within the existing price band. If the trades are executed at or above 9.9%, then the cooling period should be five minutes.

The price band should be flexed by 5% of the base price after the cooling period for up to two instances in one direction, SEBI said. It should be flexed only in the direction if the price moves without corresponding adjustment of the band on the opposite side, and flexing should be applicable equally on both exchanges. The regulator has recommended keeping a fixed price band of 5% for overnight and liquid ETFs. 

For commodity ETFs, the initial price band should be 6% and it should be flexed by 3% of the base price after a cooling-off period. If the price movement in international markets is more than the aggregate daily price limit of 9%, the same may be further relaxed in stages of 3% by the exchanges with the cooling-off period, SEBI said. 

The cooling of period should be 15 minutes after trades are executed at or above 5.9% and so on, during which trading should continue within the existing price band. If the trades are executed at or above 5.9%, then the cooling period should be five minutes. There will not be an upper or lower limit on the price bands and will also not have any restriction on the number of times the price bands can be flexed during the trading session, SEBI said.

For overnight and liquid ETFs, the close-out price will either be the highest price recorded in that ETF on the exchange in the settlement or 5% above the latest available closing price at the exchange on the day when auction offers are called for; whichever is higher will be considered.  End

Reported by Simran Rede

Edited by Deepshikha Bhardwaj

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