Sebi's New Approach to Valuing Gold and Silver in Mutual Funds

Markets regulator Sebi is set to review the valuation methodology for physical gold and silver held by mutual funds through exchange-traded funds (ETFs). This move aims to ensure greater consistency and better alignment with prevailing domestic market prices.

Proposed Changes to Valuation Practices

Sebi has proposed that Asset Management Companies (AMCs) should use spot prices published by domestic commodity exchanges to value gold and silver. This would replace the current practice of using LBMA prices, as outlined in its recent consultation paper.

Towards a Uniform Domestic Benchmark

The regulator is also focusing on identifying a uniform domestic benchmark. Additionally, it plans to make the detailed polling mechanism for spot price determination publicly available, enhancing transparency in the valuation process.

Currently, gold held by any gold ETF scheme is valued at the AM fixing price of the London Bullion Market Association in US dollars per troy ounce for gold with a fineness of 995.0 parts per thousand.