SEBI Announced Operating Guidelines for Silver ETFs

SEATTLE (Scrap Monster): The Securities and Exchange Board of India (SEBI) announced operating norms for silver exchange-traded funds (ETFs). The move is aimed at ensuring exposure to the metal in a more transparent manner.

As per the circular released by the market regulator, silver ETFs will have to invest at least 95% of net assets in silver and silver-related instrument. Furthermore, the Exchange Traded Commodity Derivatives (ETCDs) that have silver as the underlying will be considered as a silver-related instrument. The investment in them will be limited by certain conditions such as the exposure should be only up to 10% of the net asset value of the scheme, although this limit will not be applicable to silver ETFs. However, the cumulative gross exposure of silver ETFs must not exceed 100% of the net assets of the scheme.

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The mutual funds who wish to invest in ETCDs having silver as the underlying are required to submit a written policy with due approval from the board of asset management company (AMC) and trustees. Also, the policy must be reviewed at least once in a year by the board of AMC and trustees.

SEBI also noted that the silver ETF scheme will be benchmarked based on LBMA Silver daily sopt-fixing.