Norms for Silver Exchange Traded Funds (Silver ETFs) and Gold Exchange Traded Funds (Gold ETFs)
Summary
This circular establishes regulatory norms for Silver Exchange Traded Funds (Silver ETFs) and Gold Exchange Traded Funds (Gold ETFs). It mandates specific investment limits, valuation methods, and disclosure requirements to ensure transparency and investor protection. The provisions apply to all recognized stock exchanges, custodians, mutual funds, and asset management companies.
Text
Amendments to SEBI (Mutual Funds) Regulations, 1996 have been notified to establish a regulatory mechanism for Silver ETFs, coming into force on the 30th day from publication in the Official Gazette.
The objective is to generate returns that are in line with the performance of physical silver in domestic prices, subject to tracking error.
A Silver ETF Scheme shall invest at least 95% of the net assets of the scheme in Silver and Silver related instruments, including Exchange Traded Commodity Derivatives (ETCDs) having silver as the underlying.
The exposure to ETCDs having silver as the underlying shall not exceed 10% of net asset value of the scheme, except for schemes intending to take delivery of physical silver.
Before investing in ETCDs, mutual funds must put in place a written policy approved by the Board of the AMC and Trustees, reviewed at least once a year.
The cumulative gross exposure of Silver ETFs shall not exceed 100% of the net assets of the scheme.
The physical silver shall be of standard 30 kg bars with fineness of 999 parts per thousand confirming to London Bullion Market Association (LBMA) Good Delivery Standards.
Silver shall be valued based on the methodology provided in paragraph 3B of Eighth Schedule to MF Regulations.
The NAV of units of Silver ETF Scheme shall be calculated up to four decimal points using the specified formula involving market value, current assets, liabilities, and outstanding units.
The TER applicable for Silver ETF schemes shall be same as the TER applicable for ETFs in terms of Regulation 52 of MF Regulations.
The NAV of Silver ETFs shall be disclosed on daily basis on the website of the AMC, and indicative NAVs shall be disclosed on Stock Exchange platforms during trading hours.
Silver ETF Scheme(s) shall be benchmarked against the price of silver based on LBMA Silver daily spot fixing price.
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Source: SecMarx — Norms for Silver Exchange Traded Funds (Silver ETFs) and Gold Exchange Traded Funds (Gold ETFs). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.