Sebi Mandates Mutual Funds to Price Gold and Silver Using Domestic Prices

Sebi Introduces New Framework for Valuing Physical Gold and Silver in Mutual Funds

Key Highlights:

• The Securities and Exchange Board of India (Sebi) has directed mutual funds to value physical gold and silver using polled spot prices published by stock exchanges.
• The new framework replaces the current model based on the London Bullion Market Association's (LBMA) AM fixing prices.
• The change aims to introduce uniformity and transparency in pricing, making valuations more reflective of domestic market conditions.

Background:

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Currently, gold and silver exchange-traded funds (ETFs) value their physical holdings based on the LBMA's AM fixing prices. The final valuation is calculated by adjusting the LBMA price for metric and currency conversions, adding transportation costs, customs duty, applicable taxes and levies, and incorporating any notional premium or discount.

New Framework:

Under the new framework, mutual funds will use polled spot prices published by stock exchanges, which are the same benchmarks used for settlement of physically delivered gold and silver derivatives contracts on exchanges. This will ensure uniformity in practice across fund houses and make valuations more reflective of domestic market conditions.

Implementation:

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The new norms will come into effect from 1 April, 2026. The change is expected to bring more transparency and consistency in pricing, making it easier for investors to compare and evaluate gold and silver ETFs.

Market Impact:

The introduction of the new framework is likely to have a positive impact on the market, as it will simplify the valuation process for mutual funds. Gold and silver ETFs have become increasingly popular in recent times, with inflows into gold ETFs exceeding investments flowing into equity mutual funds in January. Net inflows into gold ETFs surged to ₹24,039 crore, surpassing the ₹24,028 crore attracted by equity funds during the same period. Silver ETFs inflows more than doubled to ₹9,463 crore in January compared to December 2025.