SEBI Proposes Shift in Gold, Silver ETF Valuation to Domestic Prices

India’s market regulator, the Securities and Exchange Board of India (SEBI), has proposed a significant change in how mutual funds and exchange-traded funds (ETFs) value gold and silver holdings. On July 16, 2025, SEBI suggested that domestic fund managers shift from using London Bullion Market Association (LBMA) prices to spot rates published by local commodity exchanges such as MCX. The intent is to enhance transparency and bring uniformity to valuation practices in the Indian mutual fund and ETF markets

Why the Valuation Shift Matters

Currently, gold and silver ETFs in India depend on LBMA benchmarks to calculate net asset values (NAVs). SEBI's proposal aims to replace this with prices from recognised domestic exchanges, reflecting actual Indian trading conditions and exchange-rate movements. The regulator also recommends making the domestic price polling process transparent and accessible.

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SEBI’s Consultation Process

SEBI has launched a consultation paper, inviting feedback from stakeholders through August 6, 2025. The aim is to assess the feasibility of aligning valuations with domestic spot rates and ensuring a consistent, public‑facing methodology for price polling.

Broader Implications

• Enhanced Transparency: A move to domestic prices will allow fund managers to reflect more accurate valuations, reducing the gap between global and local prices.
• Investor Confidence: Using local benchmark rates is expected to reassure retail and institutional investors that valuations mirror actual market conditions.
• Market Uniformity: Aligning valuation practices across different asset managers and ETFs is likely to promote fairness and consistency.
• Regulatory Oversight: With public disclosure of the polling mechanism, SEBI will maintain stronger oversight and safeguard against opaque valuation methods.

What Comes Next

Pending consultation outcomes, SEBI may issue a final circular mandating the switch to domestic spot prices and establish standardised polling protocols. Once implemented, mutual funds and ETFs will need to adjust their NAV calculations and fund‑management processes accordingly. This adjustment could impact fund valuations, investor sentiment, and asset flows.

Conclusion

One significant adjustment is SEBI's plan to move the valuation of gold and silver ETFs from foreign to domestic spot prices. The idea might boost investor confidence and simplify valuation procedures throughout India's precious-metals investment environment by encouraging openness and conformity to local market conditions. After reviewing stakeholder input, a final decision is anticipated later this year.