Description

BSE updates reference price methodology for Gold and Silver ETFs to use T-1 NAV with ±20% price band due to volatility in underlying precious metal prices.

Summary

BSE has revised the reference price methodology for Gold and Silver ETFs traded on the exchange. Due to volatility in underlying precious metal prices, the reference price will now be based on the T-1 (previous day) NAV published by respective Mutual Funds/Asset Management Companies, with a ±20% price band applicable for trading purposes.

Key Points

  • Reference price for Gold and Silver ETFs will be based on T-1 NAV instead of previous closing price
  • NAV to be sourced from respective Mutual Funds/Asset Management Companies
  • Price band of ±20% will apply to the T-1 NAV price
  • Change implemented to address volatility in underlying Gold and Silver prices
  • Applicable to all Gold and Silver ETFs traded on BSE

Regulatory Changes

The reference price determination methodology for Gold and Silver ETFs has been modified from the standard closing price mechanism to a NAV-based approach. This change aligns the exchange trading price more closely with the underlying asset value as determined by the fund houses.

Compliance Requirements

  • Trading Members must note the revised reference price methodology
  • Trading systems should be updated to calculate price bands based on T-1 NAV
  • Members should ensure orders are placed within the ±20% band of T-1 NAV
  • No action required from investors; change is operational

Important Dates

  • Notice Date: February 1, 2026
  • Effective Date: Immediate (from notice date)

Impact Assessment

Market Impact: Medium - This change affects the trading mechanism for Gold and Silver ETFs, potentially reducing pricing discrepancies between ETF trading prices and underlying asset values during periods of high volatility in precious metals markets.

Operational Impact: Trading members need to adjust their systems and processes to reference T-1 NAV for price band calculations rather than previous closing prices. The ±20% band provides adequate flexibility for intraday price movements while maintaining orderly markets.

Investor Impact: May result in more accurate price discovery for Gold and Silver ETF investors, as reference prices will better reflect actual fund valuations rather than secondary market closing prices.

Impact Justification

Procedural change affecting Gold and Silver ETF trading methodology to manage volatility; impacts pricing mechanism but not market structure