SEBI Mandates Domestic Spot Pricing
India’s capital markets regulator, the Securities and Exchange Board of India (SEBI), has instructed mutual funds to adopt domestic stock exchange spot prices when valuing their physical gold and silver holdings, effective April 1, 2026.
The new directive allows asset managers to use polled spot prices from recognized Indian exchanges that settle physically delivered gold and silver derivative contracts. According to SEBI, the revision aims to better align valuations with domestic market conditions.
Move Away From LBMA Benchmark
Until now, exchange-traded funds holding physical bullion typically relied on prices from the London Bullion Market Association (LBMA) as the benchmark for valuation. The regulator’s decision marks a clear shift toward domestically discovered price references.
By tying valuations more closely to Indian exchanges, SEBI seeks to enhance transparency and reflect local supply-demand dynamics in fund pricing.
Implications for Commodity Funds
The change primarily affects gold and silver exchange-traded funds and other mutual fund schemes that maintain physical holdings of precious metals. Industry participants expect the measure to reduce discrepancies between fund net asset values and local bullion market conditions.
The move underscores India’s broader push to strengthen its domestic financial market infrastructure and reduce dependence on overseas pricing benchmarks.
