SEBI replaces the fixed ETF price band with dynamic, type-specific bands and adds a commodity-ETF pre-open auction
Exchanges, clearing corporations and AMCs must implement SEBI's new ETF base-price, dynamic price-band, close-out and commodity-ETF pre-open-auction norms from 1 September 2026
Change
On 15 June 2026 SEBI replaced the fixed plus/minus 20% ETF price band on a T-2 NAV base with a T-1 closing-price base and dynamic, type-specific price bands (equity/debt 10% flexible to 20%; overnight/liquid fixed 5%; commodity 6% flexing in 3% steps), a new close-out procedure for overnight and liquid ETFs, and a pre-open call auction for commodity ETFs — effective 1 September 2026, with a move to T-1 closing NAV as base price from 1 April 2027.
Why it matters
SEBI's ETF circular overhauls price-band mechanics. The base price moves from T-2 day NAV to the T-1 day closing price (last 30-minute VWAP, with fallbacks), and exchanges and AMCs must transition to T-1 closing NAV as base price from 1 April 2027. Equity and debt ETFs (excluding overnight and liquid) get dynamic bands from plus/minus 10% flexible to 20% after cooling-off periods, flexed in 5% steps up to twice per direction; overnight and liquid ETFs retain a fixed plus/minus 5% band; and commodity (gold/silver) ETFs get dynamic bands from plus/minus 6% flexing in 3% steps with no cap and additional relaxation tied to international price moves. A new close-out procedure applies to overnight and liquid ETFs, and a pre-open call auction is introduced for commodity ETFs. Market infrastructure institutions must build systems, amend bye-laws and inform participants; the norms take effect 1 September 2026.
Implications
- — Stock exchanges and clearing corporations must reconfigure ETF price-band systems to the new type-specific regime — dynamic 10%-to-20% bands for equity and debt ETFs with the prescribed cooling-off and 5%-step flex rules, a fixed 5% band for overnight and liquid ETFs, and 6% dynamic bands flexing in 3% steps for commodity ETFs — ensuring a flex applied at one exchange is reflected across exchanges, by the 1 September 2026 effective date.
- — Stock exchanges must change the ETF base price to the T-1 day closing price (last 30-minute VWAP, with last-traded-price and closing-NAV fallbacks, adjusted for corporate actions), and exchanges together with AMCs must additionally implement the use of T-1 day closing NAV as the base price with effect from 1 April 2027.
- — Stock exchanges and clearing corporations must implement the new close-out procedure for overnight and liquid ETFs (the higher of the highest recorded settlement price or 5% above the latest closing price) and build a pre-open-session call auction for commodity (gold/silver) ETFs, leaving existing close-out and auction provisions for other ETFs unchanged.
- — All market infrastructure institutions and AMCs must put in place the necessary systems, amend their bye-laws, rules and regulations where required, and inform market participants and investors before the 1 September 2026 effective date.
Who is affected
- — Market-operations and surveillance teams at recognized stock exchanges implementing ETF price bands, base price and call auctions
- — Clearing corporations implementing the ETF close-out procedure
- — Mutual-fund AMCs and ETF-operations teams coordinating the base-price and NAV transition
What to watch
- — 1 September 2026: the new ETF base-price, price-band, close-out and commodity-ETF pre-open-auction norms take effect — exchanges, clearing corporations and AMCs must have systems and bye-law amendments in place by this date.
- — 1 April 2027: exchanges and AMCs must implement the use of the T-1 day closing NAV of ETFs as the base price for price-band determination, replacing the interim T-1 closing-price basis.