InvestorQ : What are the important norms pertaining to silver ETFs that has been just announced by SEBI?
Dia Deshpande made post

What are the important norms pertaining to silver ETFs that has been just announced by SEBI?

swati Bakhda answered.
10 months ago

Here are some of the key highlights of the silver ETF forms announced by SEBI earlier in the week.

a) Silver ETFs will enable investors to take exposure to silver as an asset class. Interestingly, silver is a bit of a precious metal and also a bit of industrial metal.

b) One of the key SEBI operating norm is that the silver ETFs have to maintain minimum 95% exposure to silver and silver-related instruments. |

c) Now, silver related instruments would include other silver ETFs or exposure to exchange traded silver derivatives, with derivatives not exceeding 10% of the NAV. This limited does not apply to silver held in derivatives for physical delivery.

d) All silver ETFs that propose to invest in exchange traded silver derivatives must crystallize and document a written policy with approval of the AMC board and trustees.

e) Cumulative gross exposure of silver ETFs must be within 100% of net assets of the scheme. Silver must be of standard 30 KG bars with 99.9% purity.

f) All silver related quantity, purity and daily valuation specifications must adhere to the norms laid down by the London Bullion Market Association (LBMA).

g) Silver ETFs have to be mandatorily listed on a recognized stock exchange and the AMC can appoint market makers to create liquidity on a continuous basis in ETF units.

h) Last, but not the least, annualized standard deviation between returns on spot silver and silver ETF units (tracking error) must not exceed 2%.

The SEBI norms also stipulate that any AMC that launches commodity linked funds, must have a commodity fund manager with adequate expertise and experience.