Direct or indirect holders of equity shares or voting rights in a bullion exchange or bullion clearing corporation must be fit and proper persons, subject to an exception for holdings below two per cent. Holdings exceeding five per cent of paid-up equity shares or voting rights require prior approval of the Authority. The application must be routed through the concerned bullion exchange or bullion clearing corporation, which must verify shareholder declarations or undertakings and submit the application with its recommendation.

Shareholding in a bullion clearing corporation requires minimum institutional ownership through a recognised bullion exchange, stock exchange, clearing corporation, or a qualifying joint venture of market infrastructure institutions. A joint venture must have majority ownership by recognised bullion exchanges or stock exchanges. Other persons, whether acting individually or in concert, are subject to a maximum holding limit in the paid-up equity share capital of the bullion clearing corporation.

Shareholding in a bullion exchange must be held either by a recognised bullion exchange or stock exchange with at least twenty-six per cent of paid-up equity capital, or by a joint venture of recognised market infrastructure institutions holding at least fifty-one per cent. Recognised exchanges must directly or indirectly hold at least fifty-one per cent in such joint venture. Other persons may not acquire or hold more than twenty-five per cent, individually or with persons acting in concert.

Ownership limits for a bullion exchange or bullion clearing corporation apply to a person's shareholding or voting rights at all times, subject to the limits prescribed in the relevant Chapter and any contrary provision within the regulations. Shareholding includes instruments owned or controlled directly or indirectly that confer a present or future entitlement to equity or rights over equity.

Bullion exchanges and bullion clearing corporations must maintain a minimum net worth of USD 10 million at all times, subject to higher requirements specified as a risk-management measure based on the nature and scale of business. They cannot distribute profits to shareholders until the prescribed net worth is achieved. An audited net worth certificate for the preceding financial year, issued by the statutory auditor, must be submitted to the Authority by 30 September annually.

Every bullion clearing corporation must maintain an orderly winding-down framework for critical operations and services in voluntary and involuntary scenarios. The framework must provide for timely settlement, cessation or transfer of positions and for transfer of members' collateral, deposits, margins and other assets to a bullion clearing corporation taking over operations. Related matters necessary for an orderly transition must also be addressed.

A bullion clearing corporation has priority to recover dues arising from the clearing and settlement functions of its bullion clearing members. Such recovery may be made from the members' collaterals, deposits and assets, with the corporation's claim prevailing over any other liability of or claim against the members.

Settlement and netting for bullion exchange and bullion clearing corporation transactions follow the netting or grossing procedures prescribed in their respective bye-laws. Payments and settlements are final, irrevocable and binding once the money, securities or other transactions payable on a gross or net settlement have been determined, irrespective of actual payment. The right to appropriate contributed collateral, deposits or margins for settlement or other obligations has priority over other liabilities or claims against the contributor.

Bullion clearing corporations must comply with the International Financial Services Centres Authority (Bullion Market) Regulations, 2025, the agreement entered into with the relevant bullion exchange, and any additional conditions imposed by the Authority. The compliance obligations operate cumulatively.

Regulation 12 requires the bullion exchange to protect consumer interests, regulate bullion contracts, and promote transparent and orderly bullion market development. Its functions include regulating trading members and intermediaries, enforcing good delivery standards, preventing fraudulent and unfair trade practices, and supporting consumer education and intermediary training. The exchange may obtain information and conduct inspections, inquiries and audits, levy fees and charges, set standards for bullion quality, quantity and verification, and establish vaulting and transport standards in consultation with the bullion depository.

A bullion exchange must engage a bullion clearing corporation through a written agreement setting out rights, obligations, conditions for admission of securities to clearing and settlement, risk management measures, charges, and related matters. Its arbitration mechanism must cover disputes or claims arising from clearing and settlement of trades executed on the exchange.

Clearing and settlement of bullion exchange trades must be conducted through the services of a bullion clearing corporation from the commencement of the bullion exchange's operations. This establishes mandatory use of a designated clearing mechanism for all trades executed on a bullion exchange.

Bullion exchanges and bullion clearing corporations must comply with the Code of Conduct prescribed in Part A of Schedule I under the International Financial Services Centres Authority (Bullion Market) Regulations, 2025. This compliance obligation governs their conduct within the recognised bullion market framework.

Withdrawal of recognition of a bullion exchange or bullion clearing corporation may be undertaken by the Authority only after affording the recognised entity an opportunity of being heard. The process must follow the manner prescribed under the Securities Contracts (Regulation) Act, 1956.

Renewal of recognition for bullion exchanges and bullion clearing corporations is subject to the provisions applicable to the original grant of recognition. Recognised entities must continuously satisfy the applicable conditions prescribed for their respective category in connection with renewal.

Recognition of a bullion exchange follows the period prescribed under rule 6 of the applicable rules. Recognition of a bullion clearing corporation may be permanent or, if granted for a specified term, must be for not less than one year as determined by the Authority.

Recognition of a bullion exchange or bullion clearing corporation may be granted after the Authority considers the application, verifies compliance with prescribed conditions, and is satisfied of the applicant's eligibility. Recognition may be subject to additional conditions considered appropriate. Refusal of recognition requires that the applicant be given an opportunity of being heard in accordance with the prescribed procedure.

Recognition requires a company limited by shares, a demutualised structure, fit-and-proper directors and shareholders, compliant ownership and governance, prescribed net worth, and adequate financial, functional and infrastructure capability. Bullion exchanges require orderly trading, real-time surveillance, member connectivity, consumer redressal, information dissemination, resilient systems and qualified personnel. Bullion clearing corporations require timely clearing and settlement infrastructure, risk management, netting, novation, settlement guarantees, connectivity, dispute resolution and agreements with a bullion depository and bullion exchange. In-principle approval is valid for one year and may be extended upon sufficient cause.

Recognition as a bullion exchange or bullion clearing corporation requires an application to the Authority in the specified form and manner with the applicable fee. The application must include specified particulars and governing instruments for bullion contracts, including constitutional documents and bye-laws. It must address the governing board's constitution and management powers, office bearers' duties, membership classes and qualifications, and procedures for exclusion, suspension, expulsion and re-admission of members. Additional matters specified by the Authority must also be included.

Regulation 2 defines the institutional, participant, governance and operational terms for the bullion market framework, including bullion exchanges, clearing corporations, depositories, vault managers, bullion contracts and bullion depository receipts. It defines associate and control, identifies key management and public-interest roles, and sets concepts of good delivery, netting, novation and net worth. Foreign jurisdictions must meet securities-regulatory cooperation requirements and avoid specified Financial Action Task Force deficiencies. Undefined expressions take their meanings from applicable parent legislation, company law and related subordinate law.