Description

BSE revises the reference price methodology for Gold and Silver ETFs to use T-1 NAV due to underlying commodity price volatility, with applicable price bands of +/- 20%.

Summary

BSE has revised the reference price methodology for Gold and Silver ETFs traded on the exchange. In response to volatility in underlying gold and silver prices, the reference price will now be based on the T-1 NAV (previous trading day’s Net Asset Value) as published by the respective Mutual Funds/Asset Management Companies, instead of the previous methodology. The existing price band of +/- 20% will be applied 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 respective AMCs
  • Change implemented due to volatility in underlying gold and silver commodity prices
  • Price band of +/- 20% remains unchanged and applies to the T-1 NAV price
  • Applicable to all Gold and Silver ETFs traded on BSE
  • Trading members must take note of this revised pricing mechanism

Regulatory Changes

The circular modifies the reference price determination mechanism for Gold and Silver ETFs from the previous methodology to T-1 NAV-based pricing. This change ensures that ETF trading prices better reflect the actual underlying asset values during periods of high commodity price volatility.

Compliance Requirements

  • Trading members must use T-1 NAV as the reference price for Gold and Silver ETFs
  • Apply the prescribed price band of +/- 20% to the T-1 NAV price
  • Ensure trading systems and operations are aligned with the revised pricing methodology
  • Monitor NAV publications from respective Mutual Funds/Asset Management Companies

Important Dates

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

Impact Assessment

Market Impact: The change provides better alignment between ETF trading prices and underlying commodity values during volatile market conditions. This should reduce pricing discrepancies and improve market efficiency for Gold and Silver ETF trading.

Operational Impact: Trading members need to ensure their systems reference T-1 NAV data from AMCs for price band calculations. The 20% price band buffer remains adequate to accommodate normal intraday volatility while preventing excessive price movements.

Investor Impact: Investors may experience more accurate pricing relative to underlying assets, particularly during periods of significant gold and silver price movements.

Impact Justification

Affects pricing methodology for Gold and Silver ETFs on BSE due to commodity price volatility. Medium impact as it changes reference price calculation but maintains existing 20% price band structure.