Description

BSE revises reference price methodology for Gold and Silver ETFs to T-1 NAV due to volatility in underlying commodity prices, with ±20% price band applicable.

Summary

BSE has revised the reference price methodology for Gold and Silver ETFs traded on the exchange. Due to volatility in underlying Gold and Silver prices, the reference price will now be based on the T-1 NAV (previous day’s Net Asset Value) as published by respective Mutual Funds/Asset Management Companies, replacing the previous pricing mechanism. The prescribed price band of ±20% will apply to this T-1 NAV price for trading purposes.

Key Points

  • Reference price for Gold and Silver ETFs will be based on T-1 NAV published by Mutual Funds/AMCs
  • Change implemented in response to volatility in underlying Gold and Silver commodity prices
  • Price band of ±20% applicable to the T-1 NAV price for trading
  • Trading members must take note of this revision
  • Applies to all Gold and Silver ETFs traded on BSE

Regulatory Changes

The exchange has modified the reference price calculation methodology for Gold and Silver ETFs from the previous mechanism to T-1 NAV-based pricing. This represents a shift to using the previous day’s officially published NAV as the baseline for determining trading price bands, ensuring alignment with actual fund valuations amid commodity market volatility.

Compliance Requirements

  • Trading members must adjust their systems and processes to use T-1 NAV as reference price
  • Price bands of ±20% must be applied to T-1 NAV for order placement and execution
  • Trading members should monitor NAV publications from respective Mutual Funds/AMCs daily
  • Compliance with revised pricing mechanism is mandatory for all Gold and Silver ETF trading

Important Dates

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

Impact Assessment

Market Impact: High - This change affects all Gold and Silver ETF trading on BSE, potentially reducing price discrepancies between ETF trading prices and underlying NAV values. Investors and traders must adapt to the new reference pricing mechanism.

Operational Impact: Trading members need to update their systems to source T-1 NAV data from AMCs and recalibrate price band calculations. The change aims to provide more accurate pricing during periods of high commodity price volatility, protecting investors from excessive deviations from fundamental value.

Trading Impact: The ±20% price band based on T-1 NAV may result in different circuit limits compared to the previous methodology, potentially affecting trading ranges and market maker operations for these ETFs.

Impact Justification

Changes fundamental pricing mechanism for Gold and Silver ETFs affecting all trading members and investors in these instruments due to commodity price volatility