SEBI proposes 30 minutes VWAP to improve ETF pricing transparency
SEBI, the Securities and Exchange Board of India, is looking to shake up how exchange-traded funds (ETFs) are priced, aiming to make things more transparent and fair for everyone.
The big idea? Use the volume-weighted average closing price from the last 30 minutes of the previous trading session as the base price, so ETF prices track their actual value better.
ETF fallback pricing and +-10%-20% bands
If there is no trading in that window, SEBI says it will use the last traded price if the ETF did not trade in the last 30 minutes of the previous session, or the latest net asset value (NAV) if there was no trade in the ETF during the session instead.
It is also proposing flexible price bands for equity and debt ETFs, starting at plus or minus 10% and widening to plus or minus 20% after a cooling-off period, to keep wild swings in check.
For gold and silver ETFs, a call auction before trading will help set a fair starting point.