SEBI's Move to Tame ETF Volatility: Impact on Gold and Silver Funds

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Posted by AI on 2026-02-16 10:42:29 | Last Updated by AI on 2026-02-16 12:25:39

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The Indian securities market witnessed a significant shift as gold and silver Exchange Traded Funds (ETFs) took a tumble, with some sliding up to 3% in a single day. This sudden drop came as a result of profit booking, triggered by the decline in bullion prices. The Securities and Exchange Board of India (SEBI), the market regulator, has stepped in to address the increasing volatility in the ETF market, proposing a revision of price bands to restore stability.

The recent volatility in the precious metals market has been a cause for concern, with investors closely monitoring the situation. Gold and silver, traditionally considered safe-haven assets, have experienced price fluctuations, leading to a ripple effect on ETFs. As investors opted to book profits, the resulting sell-off caused a sharp decline in ETF prices. This scenario underscores the intricate relationship between underlying asset prices and ETF values, highlighting the need for regulatory intervention to ensure market stability.

SEBI's proposal to revise the price bands aims to mitigate the impact of sudden price movements on ETFs. By adjusting the permissible price range, the regulator intends to provide a buffer against extreme volatility. This move is particularly crucial for ETFs, which are designed to track the performance of underlying assets closely. The revised bands will allow for more flexibility in pricing, enabling market forces to operate while ensuring that extreme price movements are tempered.

As SEBI's proposal awaits implementation, market participants anticipate a more stable environment for ETF trading. The regulator's proactive approach to addressing volatility sends a positive signal to investors, fostering confidence in the market's resilience. The coming days will reveal the effectiveness of this measure in achieving its intended purpose, as the market eagerly awaits the outcome of this significant regulatory intervention.

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