SEBI Issues Consultation Paper to Revamp ETF Base Price Calculation Norms

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:

1. Closing price of ETF on T-1 day – Based on the weighted average traded price of the last 30 minutes
2. Average iNAV of the last 30 minutes on T-1 day – iNAV refers to the indicative Net Asset Value of the ETF
3. 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.

• 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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