India’s securities market regulator has introduced a new rule that changes how mutual funds and exchange-traded funds (ETFs) value their gold and silver holdings, marking an important shift in the country’s precious metals pricing framework.
Under a circular issued on February 26, 2026, the Securities and Exchange Board of India (SEBI) directed funds to use domestic polled spot prices published by Indian exchanges, particularly the benchmark used by the Multi Commodity Exchange (MCX), to value physical bullion holdings. Earlier, many funds relied on the London Bullion Market Association (LBMA) AM fixing price, adjusting it manually to account for currency conversion, import duties, taxes and local premiums.
Why SEBI introduced the change
The new rule is intended to align ETF valuations more closely with actual market conditions in India. Bullion prices in the country are influenced by factors such as import duties, logistics costs, seasonal demand and domestic supply availability. By linking valuations directly to MCX spot benchmarks, SEBI aims to reduce subjective adjustments and ensure greater transparency in fund net asset values.
What it means for MCX
The shift could strengthen the role of MCX as a key price discovery center for precious metals in India. As ETFs and funds adopt the domestic benchmark, MCX spot prices are expected to play a larger role in reflecting the real value of bullion within the country.
Analysts note that this change also improves alignment between futures markets and ETF valuations, as MCX benchmarks are already used for settlement of bullion derivatives.
Impact on investors
For investors in gold and silver ETFs, the change may lead to net asset values that more accurately reflect the actual replacement cost of bullion in the Indian market. During periods of supply disruption or strong domestic demand, local prices can diverge from international benchmarks, and the new rule allows ETF valuations to capture those dynamics.
Part of a broader market shift
The move also reflects a broader global trend where precious metals pricing is gradually becoming multi-centered, with regional hubs like COMEX in the United States, LBMA in London, Shanghai in China and MCX in India contributing to price discovery.
As India continues to expand its bullion trading infrastructure and ETF market, the adoption of domestic benchmarks could further strengthen the country’s position in global precious metals markets.