This multi-step process often leads to different asset management companies (AMCs) using varying benchmarks and frequencies to apply the domestic premium or discount. As a result, the same gold or silver may be valued differently across funds.
ALSO READ | Nifty 50 index funds and ETFs AUM grow five times in 5 years: Factors driving the surgeSEBI’s proposal aims to end this inconsistency. It wants ETFs to directly use spot prices published by Indian commodity exchanges. These exchanges already poll prices from importers, traders, and other market participants to reflect daily domestic demand and supply.
The new method will remove the need for AMCs to manually adjust the LBMA price to local conditions. SEBI believes this will make valuation more transparent, uniform and closer to the real market price in India.If approved, this change will also align how ETFs value physical gold and silver with how they value commodity derivatives. Currently, commodity futures in ETFs already use domestic exchange prices.
SEBI also wants the polling process for spot prices to follow strict rules. Exchanges must disclose how they collect and process price data. They must show polling methods and reveal details of participants to ensure transparency.
SEBI has invited public comments on this proposal by August 6. Stakeholders can submit their views online through the SEBI website.
If implemented, the move will directly impact investors in gold and silver ETFs, ensuring fairer and more consistent valuations across the mutual fund industry.
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