Latest news with #ExchangeTradedCommodityDerivatives
Time of India
17-07-2025
- Business
- Time of India
Sebi proposes to bring uniformity in valuation process of gold and silver ETFs
The Securities and Exchange Board of India (SEBI) has proposed a review of the valuation of physical gold and silver in cases of gold and silver Exchange Traded Funds (ETFs) as this change is expected to bring uniformity in the valuation process of gold and silver throughout the mutual fund industry, for investments made by the gold and silver ETFs . SEBI has invited public feedback on this proposal by August 6, 2025, indicating a likely implementation soon after. Currently mutual fund houses managing gold and silver based ETFs use London Bullion Market Association (LBMA) price in US dollars as the benchmark, according to a consultation paper by Sebi. Explore courses from Top Institutes in Select a Course Category Data Science CXO others MBA PGDM Public Policy Cybersecurity Digital Marketing Data Science Operations Management MCA Degree Technology Project Management Design Thinking Others Healthcare Product Management Artificial Intelligence Leadership healthcare Management Finance Data Analytics Skills you'll gain: Data Analysis & Interpretation Programming Proficiency Problem-Solving Skills Machine Learning & Artificial Intelligence Duration: 24 Months Vellore Institute of Technology VIT MSc in Data Science Starts on Aug 14, 2024 Get Details Skills you'll gain: Strategic Data-Analysis, including Data Mining & Preparation Predictive Modeling & Advanced Clustering Techniques Machine Learning Concepts & Regression Analysis Cutting-edge applications of AI, like NLP & Generative AI Duration: 8 Months IIM Kozhikode Professional Certificate in Data Science and Artificial Intelligence Starts on Jun 26, 2024 Get Details Also Read | Confused between gold and silver? Why not leave it for fund manager to decide Best MF to invest Looking for the best mutual funds to invest? Here are our recommendations. View Details » by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Top 15 Most Beautiful Women in the World Further, customs duty and other applicable taxes and levies are also factored in for arriving at the final valuation. The price is further adjusted to the Indian bullion prices, which are often either at a premium or discount to the LBMA prices based on the domestic demand and supply. The fund houses managing gold and silver ETFs currently face the challenge of duplication of effort for valuing physical gold/ silver held by mutual fund schemes. Presently, different AMCs use different sources of domestic benchmark to apply necessary premium/ discount, which leads to non- uniformity of the valuation practice for gold and silver across the MF industry. Further, in the absence of any regulatory direction, AMCs use their discretion to apply premium/ discount resulting in differences in valuation of gold/ silver. Live Events While the physical gold/silver held by gold and silver ETFs are valued as per the LBMA process, the Exchange Traded Commodity Derivatives (ETCDs) on gold/silver held by MF schemes are valued as per the closing price of Futures in the domestic commodity exchange of the respective ETCDs. Therefore, if any gold/silver ETF invests in both physical gold/ silver and ETCDs, two different sources are used for valuation of the same asset class in that scheme. Sebi has now proposed consideration of spot price published by the domestic commodity exchanges for valuation of gold and silver and polling process for calculation of spot prices in case of both gold and silver. Also Read | Stocks, FD or Mutual Funds? Radhika Gupta shares 3 basics to smart investing 'SEBI's proposal to shift gold and silver ETF valuation from LBMA-based pricing to domestic commodity exchange spot rates is a significant reform. It brings uniformity across AMCs, eliminates subjective premium/discount adjustments, and aligns NAVs more accurately with local demand-supply conditions. This simplifies operations, enhances transparency, and strengthens investor confidence,' said Akshat Garg, AVP, Choice Wealth. 'As India witnesses rising gold ETF inflows amid global uncertainty, this move could boost both retail and institutional participation. While care must be taken to ensure polling mechanisms remain robust and tamper-proof, this transition reflects SEBI's broader goal of deepening trust in India's capital and commodity markets through localized, data-driven frameworks,' Garg further added.
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Business Standard
16-07-2025
- Business
- Business Standard
Sebi considering uniformity in valuation of gold, silver held by AMCs
Markets regulator Sebi is considering a review of the valuation methodology for physical gold and silver held by mutual funds through exchange-traded funds (ETFs) to ensure greater consistency and better alignment with prevailing domestic market prices. In this regard, Sebi has proposed that AMCs should use spot prices published by domestic commodity exchanges to value gold and silver, replacing the current practice of using LBMA prices, according to its consultation paper on Wednesday. It is also looking to identify a uniform domestic benchmark and make the detailed polling mechanism for spot price determination publicly available. Currently, gold held by any gold ETF scheme is required to be valued at the AM fixing price of the London Bullion Market Association (LBMA) in US dollars per troy ounce for gold having a fineness of 995.0 parts per thousand. Similarly, silver held by a silver ETF scheme is valued at the AM fixing price of the LBMA in US dollars per troy ounce for silver having a fineness of 999.0 parts per thousand. While the physical gold and silver held by gold and silver ETFs are valued based on the LBMA price after necessary conversions, the Exchange Traded Commodity Derivatives (ETCDs) on gold and silver held by mutual fund schemes are valued using the closing price of futures on the respective domestic commodity exchanges. This variation in valuation methods for the same underlying asset has highlighted the need for standardization. Accordingly, Sebi, in its consultation paper, "proposed that instead of using LBMA price as a starting point for valuation, it may be mandated that AMCs directly use the spot prices published by the domestic commodity exchanges to value the gold and silver," Sebi said. This will aid in the reduction of duplication of efforts and also represent the market prices of gold and silver as per the domestic demand and supply scenarios, it added. The move is expected to simplify the valuation process, which currently involves using LBMA prices in USD, converting them into INR, adding customs duties, and making adjustments for domestic demand or supply through notional premiums or discounts. Additionally, Sebi is looking to identify a domestic benchmark that should be adopted uniformly across the mutual fund industry for gold and silver valuation. At present, there are multiple sources of domestic spot prices such as commodity exchanges, jeweller associations, and index providers, leading to further inconsistency. Additionally, Sebi has also proposed that the detailed polling mechanism used by domestic regulated entities for determining spot prices -- including the methodology and policies ensuring fair conduct -- be made public. Currently, spot prices are derived through polling from participants in the physical market such as traders and importers, with exchanges applying statistical methods to calculate the final price. "The proposed change is expected to bring uniformity in the valuation process of gold and silver throughout the mutual fund industry for investments made by the gold and silver ETFs and more closely align their valuation with domestic prices of gold and silver," Sebi said. The Securities and Exchange Board of India (Sebi) has sought public comments till August 6 on the proposals.
