International Financial Services Centres Authority (“IFSCA”), in exercise of powers conferred under Section 28(1) read with Section 12(1) and Section 13(1) of the International Financial Services Centres Authority Act, 2019 along with Section 4, Section 8(A) and Section 31 of the Securities Contracts (Regulation) Act, 1956, read with Section 23(G) and Section 25 of the Depositories Act, 1956, dated February 17, 2025, issued the International financial Services Centres Authority (Bullion Market) Regulations, 2025 (“Bullion Market Regulations”)[1].
The Bullion Market Regulations, as notified in the Official Gazette on February 13, 2025, now replace the previously issued IFSCA (Bullion Exchange) Regulations, 2020. With the issuance of the new Bullion Market Regulations, the references which were given to the IFSCA (Market Infrastructure Institutions) Regulations shall no longer be required for resolving conflicts between the 2 (two) regulatory frameworks. The key features of the Bullion Market Regulations include:
- Expanded Scope and Name Change: The name of the regulations has been changed from the Bullion ‘Exchange’ to the Bullion ‘Market’ Regulations. This change reflects the broader scope, which shall now cover not just the bullion exchange but other participants in the bullion market as well.
- Minimum Net Worth Requirements: The Bullion Market Regulations prescribe a minimum net worth requirement of USD 10 million (Ten Million United States Dollars Only) each for a bullion exchange and a bullion clearing corporation. The IFSCA may, as a risk management measure, specify a higher net worth for these entities depending upon the nature and scale of their respective businesses.
- Key Management Personnel (“KMP”): The definition of KMP has been introduced in Regulation 2(1)(t) of the Bullion Market Regulations. The definition shall include individuals with the ability to influence decisions and those engaged in core functions.
- Revised and New Definitions:
- Consumer: The definition of Consumer has been broadened in the Bullion Market Regulations to include “a constituent of a bullion trading member or a special category client”, as specified by the IFSCA in the relevant circulars. This change accounts for the introduction of the concept of Special Category Clients (erstwhile Limited Purpose Trading Members).
- Non-Independent Directors: The term “Shareholder Directors” has been replaced by “Non-Independent Directors”, providing flexibility for bullion Market Infrastructure Institutions (“MIIs”) to appoint directors who may not necessarily represent shareholder entities, besides public interest directors.
- Code of Conduct: Although a code of conduct for directors and KMPs had been introduced by the IFSCA in September 2021, a Code of Conduct for Bullion MIIs has now been incorporated into the Bullion Market Regulations.
- Orderly Winding Down: A provision mandating Bullion Clearing Corporations to devise and maintain a framework for orderly winding down of critical operations and services has been introduced in the Bullion Market Regulations. This ensures that operations can be safely concluded in the event of winding down.
- Appointment of Key Officers: The Bullion Market Regulations incorporate certain provisions related to the appointment of Chief Risk Officer (CRO), Chief Legal Officer (CLO), and Chief Information Security Officer (CISO).
- Inspection, Enquiries, and Enforcement: A new chapter addressing inspection, enquiries, and enforcement has been introduced in the Bullion Market Regulations, providing the IFSCA with the necessary powers to regulate and enforce compliance effectively in the bullion market ecosystem.
[1] https://ifsca.gov.in/Viewer?Path=Document%2FLegal%2Fpress-release-notification-of-ifsca-bullion-market-regulations-202517022025100022.pdf&Title=Press%20Release%20on%20Notification%20of%20IFSCA%20%28Bullion%20Market%29%20Regulations%2C%202025&Date=17%2F02%2F2025