Mirae Asset: Arbitrage Helps Reduce Price Discrepancy Between Gold ETFs and NAV
Jakarta (ANTARA) - PT Mirae Asset Sekuritas Indonesia has explained that the arbitrage mechanism performed by participant dealers can help reduce the discrepancy between the price of gold exchange-traded funds (ETFs) in the secondary market and their Net Asset Value (NAV).
Simon Gunawan Sinaga, Head of Business Development at PT Mirae Asset Sekuritas Indonesia, stated that gold ETF prices in the secondary market are determined by supply and demand, which can cause them to trade higher or lower than the NAV.
“When the price deviates too far from the real-time price, we will perform arbitrage to bring the price back to normal,” Simon said during the Syailendra Media Talks titled “Gold 360°: One Asset, Four Perspectives” in Jakarta on Monday.
In the Syailendra Sharia Gold ETF (XSGO), Mirae Asset acts as a participant dealer, a party that helps provide liquidity by posting buy and sell quotes and facilitating the creation and redemption of ETF units.
Simon explained that ETF transactions occur through both primary and secondary markets. The primary market is used to create or redeem ETF units through participant dealers, whereas listed units can be traded between investors in the secondary market.
Because prices in the secondary market are formed through market mechanisms, their value may differ from the NAV, which reflects the value of the assets within the ETF portfolio.
When this discrepancy becomes too wide, participant dealers can execute transactions in the secondary market and utilise the unit creation or redemption mechanism in the primary market to perform arbitrage.
Through this mechanism, participant dealers can help narrow the price gap while simultaneously providing liquidity for investors looking to buy or sell ETF units.
“So, as a participant dealer, we will certainly participate in trading, but our interest is to act as a liquidity provider; our function is to serve as a liquidity provider,” Simon noted.
However, he emphasised that the presence of participant dealers does not eliminate market mechanisms. He explained that ETF prices in the secondary market continue to move based on investor supply and demand.
Therefore, he advised investors to pay attention to the bid-ask spread and the available volume when conducting ETF transactions.
“That is why it is necessary to check the spread and the volume provided by the Participant Dealer,” he said.
Financial Services Authority Regulation (POJK) Number 2 of 2026 requires investment managers to enter into contracts with participant dealers to ensure the market liquidity of gold ETF units. Participant dealers are also required to possess the capability to facilitate liquid trading.
To maintain liquidity, the regulation stipulates that participant dealers may buy and sell units and are obligated to periodically or continuously submit buy or sell offers through the exchange trading system.
The POJK, which has been in effect since 23 February 2026, also mandates that investment managers announce the NAV of gold ETFs after the close of trading each day as an indication of the unit price.
Meanwhile, the Custodian Bank is required to calculate and announce the NAV on every trading day.
Previously, the OJK noted that seven investment managers have applied for permits to issue gold ETFs. Of those, six have received effective statements, and five products were launched on 10 August 2026.
The OJK, alongside Self-Regulatory Organisations (SRO), launched gold ETFs on 10 August 2026 as one of the ‘quick wins’ from eight integrated market deepening action plans.
The development of these instruments aims, among other things, to expand investment options and increase market liquidity.