Shareholding-limit monitoring requires bullion exchanges and bullion clearing corporations to maintain an adequate mechanism for continuous compliance with applicable shareholding conditions. The framework must operate at all times to ensure adherence to ownership limits governing these market institutions.

Direct or indirect acquisition or holding of equity shares or voting rights in a bullion exchange or bullion clearing corporation requires the shareholder to be a fit and proper person, 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. Applications must be made through the concerned bullion exchange or bullion clearing corporation, which must verify shareholder declarations or undertakings and forward the application with its recommendation.

Shareholding in a bullion clearing corporation must be held by specified recognised exchanges or clearing corporations 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. In a joint venture structure, the relevant bullion exchange or recognised stock exchange must hold at least fifty-one per cent within the joint venture. Other persons, individually or acting in concert, cannot directly or indirectly hold more than twenty-five per cent of paid-up equity capital.

Shareholding in a bullion exchange must be held through a qualifying bullion or stock exchange, or through a joint venture of market infrastructure institutions meeting prescribed ownership thresholds. Where a joint venture holds the exchange, qualifying bullion exchanges or stock exchanges must directly or indirectly retain the required majority shareholding in that joint venture. Other persons may not, individually or with persons acting in concert, directly or indirectly acquire or hold beyond the prescribed ceiling.

Ownership limits for shares or voting rights in a bullion exchange or bullion clearing corporation apply continuously, subject to specified exceptions. Shareholding includes instruments directly or indirectly owned or controlled that confer a 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.