Intra-day NAV to be applicable for ETF transactions by large investors directly with AMCs

File image of the SEBI Headquarters in Mumbai (Image: Reuters)

The Securities and Exchange Board of India (SEBI) on July 30 announced guidelines pertaining to applicability of intra-day net asset value (NAV) for transactions in units of Exchange Traded Funds (ETFs) directly with asset management companies.

The decision was taken based on feedback received from the mutual fund (MF) industry and recommendations of the capital markets regulator's mutual fund advisory committee, according to a circular.

For transactions in units of ETFs by authorised participants and large investor directly with Asset Management Companies (AMCs), SEBI said "intra-day NAV, based on executed price at which securities representing the underlying index or underlying commodity(ies) are purchased/sold, shall be applicable”.

The industry provided feedback that for transactions in units of ETFs by authorised participants and large investors directly with the AMCs, 'closing NAV of the day' may not be relevant as these transactions are based on price at which the securities representing the underlying index or underlying commodity(ies), are purchased or sold.

The regulator said that appropriate disclosures in this regard will have to be provided in the scheme information document, key information memorandum and common application form.