Direct redemption of ETF units is available to investors other than market makers through the Fund Management Entity without an exit load where market-pricing or liquidity conditions are met. These conditions include a closing traded-price discount exceeding five per cent of NAV for 30 continuous trading days, absence of quotations on a recognised stock exchange for five consecutive trading days, or inadequate aggregate bid size averaged over seven consecutive trading days.

Each FME must calculate the NAV of every ETF daily, publish it on its website, and notify the recognised stock exchange on which the ETF is listed for website disclosure. NAV calculation procedures and methodology must be comprehensively documented, regularly verified, and amended where necessary.

Regulation 68 requires a Fund Management Entity to appoint a market maker to ensure ETF trading liquidity through two-way quotes. Market makers may create units and seek redemptions directly from the Fund Management Entity. Recognised stock exchanges may simplify authorisation for registered intermediaries and must frame rules on spreads, minimum quantities, incentives, margining and net settlement.

Actively managed exchange-traded funds permit the fund management entity to exercise discretion over portfolio composition in accordance with stated investment objectives and policies. Offer documents and advertising material must disclose their actively managed status and explain how stated objectives, including intended index outperformance where applicable, will be met. Draft offer documents must be filed with the recognised stock exchange or exchanges proposed for listing and with the Authority.

Silver ETFs must maintain predominant investment in silver or eligible silver-backed bullion instruments, with derivative exposure generally limited unless physical delivery is intended. They must track a recognised spot-silver benchmark with minimal tracking error. Physical silver must be responsibly sourced from an OECD-compliant certified refiner and stored in a registered vault. Independent physical verification is required half-yearly, with reports furnished to the fund management entity and fiduciaries within the prescribed period.

Gold ETFs must maintain at least 90% of assets under management in gold or eligible bullion instruments. Gold-based exchange-traded commodity derivatives are generally limited to 10% of assets, unless physical delivery is intended instead of rolling over derivative positions. ETFs must track an approved spot-gold benchmark with minimal tracking error. Physical gold must be responsibly sourced from certified refiners, stored in a registered vault, and independently verified every half-year, with reports submitted to the fund management entity and fiduciaries within two months.

GST refund applications must be decided within prescribed timelines, as delay beyond 60 days from receipt of an application may trigger interest liability. Refunds may be granted only after field verification of the applicant firm's registered premises to establish genuineness, with documentary records maintained by the proper officer. Signed fortnightly, ward-wise refund reports must record decisions, delayed and pending applications, sanctions, rejections and interest paid, and be consolidated for submission to the Commissioner, State Tax.

Commodity-based ETFs must invest at least 90% of their assets in the specified commodity or commodity-related security or instrument identified by the Authority. A Fund Management Entity launching a commodity-based ETF must designate a Key Managerial Personnel with at least five years' experience in commodities as the Fund Manager.

A Fund Management Entity may launch an ETF replicating a debt index of the IFSC, India, or a foreign jurisdiction. Replicating indices must generally contain at least five issuers, limit each issuer's weight, and comprise investment-grade constituents, subject to an exception for Government securities. The ETF must replicate its underlying index to at least 90 per cent of total assets. Deviations caused by unavailable constituent issuances must minimise tracking error and conform to offer document disclosures.

An ETF replicating a particular equity index must track an index comprising at least ten constituent stocks. In a sectoral or thematic index, any single stock's weightage must not exceed 35 per cent; in every other index, the corresponding cap is 25 per cent. The ETF must replicate its underlying index to at least 95 per cent of total assets.

Regulation 61 permits only Registered FMEs (Retail) to launch ETFs after filing a draft offer document and applicable fees at least twenty-one working days before launch. Authority comments must be incorporated before launch, and material changes must be immediately reported. ETFs must be listed and traded on a recognised stock exchange. Fiduciary approval is mandatory before filing, while actively managed and other approved ETFs require prior stock exchange approval. IFSC-listed ETFs must use the identifier "IFSC ETF" in their name, offer document, and advertising material.

Special situation funds must comply with the disclosure, valuation, NAV computation and fund management entity contribution norms applicable to close-ended restricted schemes under Chapter III. As a category of restricted schemes, they must additionally meet requirements specified from time to time for close-ended restricted schemes.

Borrowing by a special situation fund is prohibited, including leveraging activities, except where necessary to meet day-to-day operational requirements.

Special situation funds must maintain the minimum corpus, accept only eligible investors, and comply with additional investment conditions as specified by the Authority. The applicable corpus threshold, investor eligibility requirements, and supplementary investment conditions are determined by the Authority.

Special situation funds must invest exclusively in special situation assets under Regulation 57 of the International Financial Services Centres Authority (Fund Management) Regulations, 2025.

Special situation funds must be close-ended and constituted in an International Financial Services Centre as a company, limited liability partnership, trust, or another permitted legal form. Their tenure must be at least three years and disclosed in the placement memorandum. An extension of up to two years requires approval from investors holding two-thirds by value of investments. Any further extension requires express consent from willing investors and an exit opportunity for dissenting investors.

Special situation funds may be launched by a Registered FME through a private placement memorandum filed with applicable fees. Restricted schemes follow a green-channel process and may open for subscriptions once the placement memorandum is taken on record. The memorandum is valid for twelve months, within which the FME must achieve the prescribed minimum corpus and declare first close. A one-time six-month extension is available on payment of the prescribed reduced fee. Material changes must be immediately informed to the Authority.

Special situation assets include eligible stressed loans, security receipts issued by Reserve Bank-registered Asset Reconstruction Companies, and securities of companies connected with stressed loans, security receipts, insolvency proceedings, or continuing payment defaults. Default-related and insolvency-related securities require a "D" or equivalent downgrade. A special situation fund invests in these assets in accordance with its investment objectives and may act as a resolution applicant under the Insolvency and Bankruptcy Code, 2016.

Regulation 53 permits a Registered FME to launch a special situation fund in accordance with Part D and the provisions of the governing Chapter. The authority to launch is qualified by compliance with that Chapter's applicable provisions, so the permission to establish the fund operates within the special situation fund framework.

An FME or its associate must contribute to a retail scheme at least one per cent of its assets under management or USD 200,000, whichever is lower. This obligation is excluded for relocated overseas funds or schemes and for fund of funds schemes investing in schemes with similar contribution requirements. The contribution must be made within forty-five days, maintained continuously, and may receive an extension. FME contributions may count towards applicable net-worth requirements.