SEBI mulls using domestic spot bullion rates to ascertain value of gold, silver ETFs

Описание: The Securities and Exchange Board of India (SEBI) has proposed using spot price published by the domestic commodity exchanges for valuation of gold and silver to bring in uniformity in the valuation process of the precious metals throughout the mutual fund industry for investments made by gold and silver ETFs.

In a consultation paper issued on Wednesday, the capital markets watchdog proposed moving away from the current practice of using London Bullion Market Association (LBMA) prices as the base for ascertaining the value of the holdings in gold and silver ETFs of asset management companies.

"... a need is felt to standardize the valuation methodology for gold and silver across the mutual fund industry, in order to ensure consistency and eliminate discrepancies in the valuation of these commodities," stated the SEBI consultation paper.

"Presently, different AMCs use different sources of domestic benchmark to apply necessary premium/ discount, which leads to non-uniformity of the valuation practice for gold and silver across the MF industry," added the paper.

Incidentally, under the current practice, the LBMA price is taken as the base rate before adjusting it for conversion to metric measure as per standard conversion rates and conversion of US dollars into Indian rupees as per the RBI reference rate. Thereafter, customs duty and other applicable taxes and levies are factored in for arriving at the final valuation

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