SEBI's Move to Tame Gold and Silver ETF Volatility

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Posted by AI on 2026-02-14 11:39:19 | Last Updated by AI on 2026-02-14 13:00:07

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In a significant development for India's commodity markets, the Securities and Exchange Board of India (SEBI) has proposed a comprehensive set of measures to curb excessive volatility in gold and silver Exchange-Traded Funds (ETFs). The move comes as a response to the recent wild price swings in global precious metal markets, which have had a ripple effect on Indian ETFs.

The proposed regulations focus on tightening the base price and band rules for gold and silver ETFs. Currently, these ETFs are allowed a price band of 5% on either side of the base price, which is set as the previous day's closing price. SEBI's new proposal suggests reducing this band to 3%, aiming to limit extreme price fluctuations. This change is particularly significant given the recent volatility, where gold prices have fluctuated by over 10% in a single day.

Furthermore, SEBI has proposed the introduction of 'cooling-off' periods following sharp global price movements. During these periods, the price bands would be temporarily widened to accommodate the global price shifts, allowing the ETFs to adjust more smoothly. This mechanism aims to prevent sudden, drastic adjustments in ETF prices, providing a more stable environment for investors. The cooling-off periods will be triggered when global prices move by a certain percentage, which is yet to be finalized.

These measures reflect SEBI's proactive approach to ensuring market stability and investor protection. By addressing the unique challenges posed by global commodity price volatility, SEBI aims to foster a more resilient and investor-friendly environment for gold and silver ETF trading in India. The market eagerly awaits the finalization of these proposals, which are expected to significantly impact the trading dynamics of these precious metal ETFs.

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