The Securities and Exchange Board of India (SEBI) has issued a circular introducing a revised framework for determining the base price, price bands, pre-open call auction mechanism, and close-out procedures applicable to Exchange Traded Funds (ETFs). The changes are aimed at improving price discovery, aligning ETF trading with movements in the underlying assets, and addressing operational challenges arising from the existing pricing methodology. The revised framework will come into effect from September 1, 2026.

Under the revised framework, the base price for ETFs will initially be determined using the T-1 day closing price (last 30-minute VWAP) instead of the earlier T-2 day NAV. In the absence of trading during the last 30 minutes, the last traded price will be used, and where no trade occurs on T-1, the latest available closing NAV will serve as the base price. SEBI has also indicated that stock exchanges and asset management companies should work towards adopting the T-1 day closing NAV as the base price from April 1, 2027.

The circular further introduces dynamic price bands for Equity ETFs, Debt ETFs (excluding Overnight and Liquid ETFs), and Commodity ETFs. Equity and Debt ETFs will have an initial price band of ±10%, which may be expanded up to ±20% following a prescribed cooling-off period. Commodity ETFs will operate with an initial ±6% band, with provisions for further relaxation during exceptional international market movements. Overnight and Liquid ETFs will continue to be subject to a fixed ±5% price band. Additionally, SEBI has mandated a pre-open call auction mechanism for Gold and Silver ETFs to facilitate efficient price discovery.

The circular also revises the close-out methodology for Overnight and Liquid ETFs while retaining the existing provisions for other ETF categories. Stock exchanges, clearing corporations and market intermediaries have been directed to implement the necessary system changes, amend relevant rules and regulations, and disseminate the revised framework to market participants before the effective date.

The Securities and Exchange Board of India (SEBI) has issued a circular prescribing a comprehensive framework for the winding-up of Alternative Investment Funds (AIFs), introducing flexibility to retain liquidation proceeds beyond the permissible fund life under specified circumstances and creating a new ‘Inoperative Fund’ status. The circular follows amendments to the SEBI (Alternative Investment Funds) Regulations, 2012, notified on April 18, 2026, and is aimed at facilitating an orderly closure of AIFs while safeguarding investor interests. The provisions are also extended to Venture Capital Funds (VCFs) registered under the erstwhile SEBI (VCF) Regulations, 1996.

Under the revised framework, AIFs may retain liquidation proceeds beyond the permissible fund life where there are pending or anticipated litigation, tax or regulatory liabilities, or residual winding-up related operational expenses. Such retention is permitted subject to prescribed conditions, including demonstrable evidence of potential liabilities, approval from at least 75% of investors by value for anticipated liabilities, or substantiation of operational expenses. Managers are also required to disclose the amount proposed to be retained and the expected retention period to investors. The retained monies must be invested only in accordance with Regulation 15(1)(f) of the AIF Regulations and distributed immediately upon resolution of the outstanding liabilities.

The circular further introduces the concept of an ‘Inoperative Fund’, enabling an AIF to surrender its registration while continuing to manage retained monies until pending liabilities are resolved. An AIF obtaining this status cannot launch new schemes or charge management fees and is exempted from several ongoing regulatory compliances, including periodic reporting, valuation requirements, compliance test reports, investor disclosures, and certain certification requirements. However, such funds are required to submit an annual status report to SEBI and investors detailing retained monies, outstanding liabilities, and the progress towards final distribution.

The circular comes into force with immediate effect and requires AIFs and eligible VCFs to comply with the prescribed application process, reporting formats, and operational requirements. By introducing a structured mechanism for retention of proceeds and creating an inoperative status, SEBI seeks to provide operational flexibility during fund winding-up while ensuring transparency, investor protection, and regulatory oversight.

SEBI has released a consultation paper proposing a comprehensive review of the Margin Trading Facility (MTF) framework with the objective of enhancing operational efficiency, facilitating ease of doing business for stock brokers, and strengthening risk management practices. The proposals have been formulated based on suggestions received from the Brokers’ Industry Standards Forum (ISF), deliberations of the Secondary Market Advisory Committee (SMAC), and stakeholder consultations.

Among the key proposals, SEBI has suggested expanding the forms of eligible collateral by permitting collateral accepted in the normal cash market for MTF transactions and allowing the use of EPI sell credits under specified conditions. The consultation paper also proposes introducing a 30-day rebalancing period where securities funded or pledged under MTF move out of the eligible Group I category, along with a uniform Rights and Obligations document to be jointly developed by all stock exchanges to ensure consistency across the market.

The consultation paper further proposes broadening the funding avenues available to brokers by permitting borrowings through Non-Convertible Debentures (NCDs) and other debt instruments. Other proposals include revising broker exposure limits, increasing the minimum net worth requirement for brokers offering MTF from ₹3 crore to ₹5 crore, permitting LLPs to offer MTF, enabling fungibility between MTF and non-MTF ledgers, and streamlining disclosure and reporting requirements. However, SEBI has proposed to retain the higher maintenance margin requirement (VaR + 5 ELM) for cases where cash collateral is used as pay-in and the funded stock is simultaneously treated as collateral, citing concerns relating to wrong-way risk.

SEBI has issued a consultation paper proposing the introduction of a Common Advertisement Code for specified SEBI-regulated entities, including stock brokers, depository participants, investment advisers, research analysts, portfolio managers, online bond platform providers and mutual funds/asset management companies. The proposal seeks to replace the existing fragmented advertisement framework with a harmonized code aimed at promoting regulatory consistency, investor protection and ease of doing business.

Among the key proposals, SEBI has suggested replacing the existing prior approval mechanism for advertisements with a post-issuance reporting framework, under which advertisements would be reported to the relevant supervisory body within 24 hours of publication. However, advertisements featuring celebrity endorsements would continue to require prior approval. The paper also proposes permitting celebrity endorsements at the brand or entity level only, while prohibiting endorsements of specific products or services to minimize the risk of influencing investor decisions.

The consultation paper further proposes allowing the use of PaRRVA-assigned ratings and rankings in advertisements, subject to appropriate disclosures and safeguards. It also seeks to permit abbreviated disclosures in short-format digital communications, such as SMSs, push notifications and pop-ups, provided they include a hyperlink to the complete disclosures. In addition, SEBI has proposed excluding purely educational and investor-awareness content from the scope of advertisements, introducing an explicit prohibition on the use of dark patterns, and adopting a technology-enabled post-issuance monitoring framework for regulatory oversight.