Sebi revamps ETF trading framework, introduces dynamic price bands

SEBI has revamped the ETF trading framework, replacing the existing fixed 20% price band with a dynamic mechanism that allows bands to widen in stages after cooling-off periods triggered near limit thresholds. The base price methodology will shift from the T-2 NAV to the previous day's VWAP (last 30 minutes), with stock exchanges and AMCs to jointly work toward using T-1 closing NAV by 1 April 2027. Gold and silver ETFs will get separate treatment with 6% starting bands expandable in 3% stages, call auctions in pre-open sessions, and the ability to relax limits when international prices move post Indian market hours. The revised norms will come into effect from September 2026.