New Delhi, June 15 -- The Securities and Exchange Board of India (Sebi) has revised the rules governing how exchange-traded funds (ETFs) are priced and traded, including base prices, daily price limits, pre-open auctions and settlement of failed trades, to ensure ETF prices better reflect the value of their underlying assets.

In a consultation paper issued on Monday, the market regulator said the move was triggered by concerns that the current ETF framework uses a reference price with a one-day lag and fixed price bands that may not align with movements in value of the assets they track.

Currently, equity, debt and commodity ETFs are subject to a fixed 20% price limit, while overnight ETFs operate with a 5% band. These bands are applied...