November 24, 2021
All Recognized Stock Exchanges/
All Custodians/
All Mutual Funds (MFs)/
All Asset Management Companies (AMCs)/
All Trustee Companies/ Board of Trustees of Mutual Funds/
Association of Mutual Funds in India (AMFI)
Sir / Madam,
A. In order to have regulatory mechanism for Silver Exchange Traded Funds (Silver ETFs), amendments to SEBI (Mutual Funds) Regulations, 1996 (hereinafter called as “MF Regulations”) have been notified vide Gazette notification no. SEBI/LADNRO/GN/2021/56 dated November 9, 2021. These amendments to MF Regulations shall come into force on 30th day from the date of their publication in the Official Gazette.
B. With respect to Silver ETFs, the following operating norms have been specified:
1. Investment Objective: To generate returns that are in line with the performance of physical silver in domestic prices, subject to tracking error.
2. Investments:
2.1 A Silver ETF Scheme shall invest at least 95% of the net assets of the scheme in:
2.1.1. Silver and
2.1.2. Silver related instruments. Exchange Traded Commodity Derivatives (ETCDs) having silver as the underlying shall be considered as ‘silver related instrument’ for Silver ETFs. Investment in ETCDs having silver as the underlying by Silver ETFs will be subject to following conditions:
i. The exposure to ETCDs having silver as the underlying shall not exceed 10% of net asset value of the scheme. However, the above limit of 10% 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 next contract cycle.
ii. 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.
iii. The cumulative gross exposure of Silver ETFs shall not exceed 100% of the net assets of the scheme.
2.2. 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.
3. Valuation: Silver shall be valued based on the methodology provided in paragraph 3B of Eighth Schedule to MF Regulations.
4. Determination of Net Asset Value (NAV):
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