What new ETFs norms to come into effect from the 7th in 2026?

SEBI has introduced significant changes to the rules governing base prices, pre-open auctions, and price bands for ETF investments. Designed to protect investors and regulate excessive market volatility, these new regulations will come into effect on September 7.

Changes to base price and pre-open auction rules

Change in base price: Previously, the Net Asset Value (NAV) from two days prior served as the base price. Going forward, the average market price during the last 30 minutes of the previous trading day will be considered the base price. In the event that no trading occurred, the last traded price or the NAV will be taken into account.

Equity and Debt ETFs: The price band, previously set at 20 percent, will now be reduced to an initial 10 percent. Once the 10 percent limit is reached, a 15-minute 'cooling-off' period will follow, after which the band will be expanded by an additional 5 percent in the direction of the price movement.

Gold and Silver ETFs: The initial price band for these ETFs has been set at 6 percent. "In line with international price fluctuations, the price band will be expanded in a phased manner—by 3 percent—following a 'cooling-off' period."

New Pre-Open Mechanism: Since gold and silver prices in international markets fluctuate even during the night, a 'pre-open' auction mechanism—similar to the one used for equities—is being introduced for Gold and Silver ETFs for the first time to determine an accurate opening price.

Close-out Procedure: In the event of a failure to deliver units during 'Overnight' and 'Liquid' ETF trading, the settlement price will be calculated based on either the highest price recorded during the settlement period or the final price plus a 5 percent premium—whichever is higher.

Uniform Price Band: To avoid price discrepancies between the NSE and BSE, if the price band is expanded on one exchange, the same band will be immediately implemented on the other.

These changes will ensure that ETF prices remain closely aligned with their actual value. Therefore, rather than buying at the prevailing market price, it is safer for investors to use 'limit' orders and make investment decisions based on the asset's value.

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