New regulatory norms for gold and silver ETFs will come into effect from 1 April 2026, potentially impacting investors and fund structures. The new norms are aimed at bringing uniformity and ensuring valuations that reflect domestic market conditions.
The change aligns with the SEBI (Mutual Funds) Regulations, 2026, coming into effect. This was notified earlier this year.
The Securities and Exchange Board of India (Sebi) has revised the valuation framework for physical gold and silver held by mutual fund schemes, mandating the use of exchange-published polled spot prices to determine their value.
In a circular issued on Thursday, February 26, the market regulator said: “It has been decided that with effect from April 01, 2026… the mutual funds shall value physical Gold and Silver by using the polled spot prices published by the recognised stock exchanges which are used for settlement of physically delivered Gold and Silver derivatives contracts.”
The new norms will replace the existing benchmark-linked approach. The decision follows discussions in the Mutual Fund Advisory Committee and a public consultation with stakeholders.
Sebi said that since stock exchanges are subject to transparency and compliance requirements under the regulatory framework, “using the spot price published by such regulated entities shall lead to valuation reflective of domestic market conditions and also ensure uniformity in the valuation practices.”
The new SEBI norms mean that gold and silver ETFs will now be valued using domestic exchange spot prices instead of international benchmarks.
For investors, this brings greater transparency and uniformity in Net Asset Value (NAV) calculations, making it easier to compare schemes.
Market experts note that while gold and silver ETFs track underlying metal prices, differences in valuation practices, tracking efficiency, and liquidity can result in small variations in returns across schemes.
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The Association of Mutual Funds in India (Amfi), in consultation with Sebi, will prescribe a uniform policy for the implementation of the revised valuation mechanism.
At present, physical gold and silver held by ETFs are valued based on the AM fixing prices of the London Bullion Market Association (LBMA).
Under the existing system, LBMA prices are adjusted through metric and currency conversions and the addition of transportation costs, customs duty, applicable taxes, and levies. A notional premium or discount is also factored in to arrive at domestic valuations.
Sebi also added that the spot polling mechanism should comply with its guidelines specified by the regulator from time to time. A uniform spot-based valuation mechanism could reduce discrepancies and improve comparability for investors.