SEBI to introduce dynamic price bands for ETFs
SEBI is looking to update how Exchange Traded Funds (ETFs) are priced, aiming for more accurate and stable prices that reflect real market conditions.
These changes come after discussions with exchanges and mutual fund players, all focused on protecting investors from sudden price swings.
What do these changes mean for you?
If you invest in ETFs or are just ETF-curious, these updates could mean less risk and fewer surprises.
SEBI plans to use the previous day's (T-1) Net Asset Value (NAV), published by 11pm instead of the older T-2-day NAV—so prices will be more current.
Plus, new dynamic price bands will start at +-10% for equity and index ETFs (and can stretch to +-20% after a cooling-off period), making ETF trading safer and more in line with how other markets work.
Why the change?
The old system—with fixed +-20% bands and outdated NAVs—sometimes caused ETF prices to drift away from their true value, especially during corporate actions such as stock splits or dividends.
A recent study (April 2024-March 2025) showed most ETFs already trade within tighter bands anyway.
SEBI hopes these tweaks will align ETF trading with real-time market conditions, reduce pricing errors, and better manage volatility.