Sebi is proposing significant changes to ETF pricing frameworks to improve market accuracy and reduce pricing discrepancies. The regulatory proposal aims to address current limitations in price band calculations by potentially using T-1 day closing prices instead of T-2 day net asset values. This move could create more precise pricing mechanisms for exchange-traded funds, potentially reducing volatility risks and manual calculation errors. The current fixed 20% price band for most ETFs may not adequately reflect underlying market movements, prompting the regulator to suggest more dynamic pricing methods. Key proposed alternatives include using ETF closing prices, weighted average traded prices from the last 30 minutes, or average indicative net asset values.
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