SEBI Issues Unified Trading Norms for Exchange Traded Funds
The Securities and Exchange Board of India (SEBI) introduced a new framework on June 15, 2026, to standardize trading mechanics for Exchange Traded Funds. These guidelines cover base price determination, price bands, and call auctions during pre-open sessions, alongside a defined close-out procedure for unsettled trades.
By aligning ETF operations with broader equity standards, SEBI addresses pricing gaps between market value and underlying Net Asset Value (NAV). The formalized call auction in the pre-open phase facilitates stable price discovery, while dynamic bands curb irrational volatility. These measures institutionalize the ETF ecosystem, offering a predictable environment for all investors. A structured close-out procedure further ensures that settlement failures do not disrupt market stability.
- Base Price: Calculated using the previous closing price or the underlying NAV.
- Price Bands: Dynamic limits implemented to manage intraday swings.
- Call Auctions: Standardized pre-open sessions for better price discovery.
- Close-out: Defined protocols for handling unsettled ETF transactions.
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