SEBI tightens ETF pricing, shifts base price to T-1 VWAP, revises bands
ETFs will price closer to real-time NAV as SEBI cuts base price lag to one day and introduces differentiated price bands by ETF type.
What changed
- Base price moves from T-2 NAV to T-1 closing VWAP, effective April 1, 2027
- Fixed ±20% band replaced with differentiated bands for equity, debt, overnight, liquid, and commodity ETFs
- New call auction norms and revised close-out mark-up procedures for ETFs
The read
SEBI just rewrote the pricing rulebook for every ETF on Indian exchanges. The change that matters most: base price moves from T-2 day NAV to T-1 day closing VWAP, cutting the lag by one full day. The old fixed ±20% band is dead, replaced by differentiated bands for equity, debt, overnight, liquid, and commodity ETFs — calibrated to each asset type's actual price range. A working group and public consultation preceded this. The result: ETF price bands will now track underlying assets more tightly, reducing the risk of stale pricing during volatile sessions. The catch: AMCs and exchanges have until April 1, 2027 to build the systems for T-1 closing NAV. Until then, the old T-2 base remains. This is a structural upgrade, not a quick fix.
Primary source: official circular (PDF)