Consultation Paper; Dated: 13.02.2026
The Securities and Exchange Board of India (SEBI) has released a consultation paper to review provisions relating to the base price and price bands for Exchange-Traded Funds (ETFs) on T-Day.
Stakeholders have been invited to provide comments on the proposed changes.
1. Background – Exchange-Traded Funds (ETFs)
An Exchange-Traded Fund (ETF) is a mutual fund scheme that:
- Invests in securities in the same proportion as an underlying index
- Has its units mandatorily listed and traded on stock exchanges
- Allows investors to buy and sell units on the exchange platform like equity shares
The pricing framework for ETFs plays a critical role in ensuring market efficiency and investor protection.
2. Proposal to Review Base Price Determination on T-Day
SEBI has proposed revising the mechanism for determining the base price on T-Day (trading day).
The base price may be determined using any of the following methods:
- Closing price of ETF on T-1 day – Based on the weighted average traded price of the last 30 minutes
- Average iNAV of the last 30 minutes on T-1 day – iNAV refers to the indicative Net Asset Value of the ETF
- Closing NAV of the ETF on T-1 day
These alternatives aim to provide flexibility and ensure more accurate price discovery.
3. Objective of the Proposed Changes
The review seeks to:
- Improve price discovery mechanisms for ETFs
- Align trading price with underlying asset value
- Reduce volatility and pricing anomalies
- Enhance investor protection and market efficiency
4. Public Consultation Timeline
SEBI has invited comments and suggestions from stakeholders on the consultation paper.
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Last date to submit comments – 6 March 2026
Feedback received will be considered before finalising the revised framework.
5. Key Takeaway
SEBI’s consultation proposes flexible methods for determining the base price of ETFs on T-Day to improve pricing accuracy and market stability, with stakeholder feedback invited before implementation.
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