SEBI issues regulatory mechanism for Silver ETFs

Our Bureau Mumbai | Updated on November 25, 2021

Must invest at least 95% of the net assets in silver and silver related instruments: SEBI

In order to have a regulatory mechanism for Silver Exchange Traded Funds (Silver ETFs), market regulator SEBI has changed mutual fund regulations that makes it mandatory for Silver ETF schemes to invest at least 95 per cent of the net assets of the scheme in Silver and Silver related instruments.

Exchange-Traded Commodity Derivatives (ETCDs) having silver as the underlying shall be considered as ‘silver related instrument’ for Silver ETFs. The exposure to ETCDs having silver as the underlying shall not exceed 10 per cent of net asset value of the scheme.

However, the above limit of 10 per cent shall not be applicable to Silver ETFs where the intention is to take delivery of the physical silver and not to roll over its position to the next contract cycle.

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“Before investing in ETCDs having silver as the underlying, mutual funds shall put in place a written policy with regard to such investment with due approval from the Board of the AMC and the Trustees. The policy shall be reviewed by the Board of AMC and Trustees at least once a year,” SEBI said.

The physical silver shall be of standard 30 kg bars with fineness of 999 parts per thousand (or 99.9% purity) confirming to London Bullion Market Association (LBMA) Good Delivery Standards.

Published on November 25, 2021

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