Centre proposes price caps, trading curbs in mineral exchange rules

Draft rules mandate strict surveillance, price disclosure and regulatory powers to cap prices and halt trading, aiming to formalise and bring transparency to mineral markets

As part of draft rules to operationalise mineral exchanges in India, the Centre has proposed sweeping powers for the regulator to cap prices and halt trading in mineral markets.

 

Under the draft Mineral Exchange Rules, 2026, the Indian Bureau of Mines (IBM) will be empowered to impose floor or ceiling prices, suspend trading during periods of high volatility, and withdraw specific contracts, marking a significant intervention mechanism in a sector where pricing has largely remained opaque.

 

The move follows recent amendments to the Mines and Minerals (Development and Regulation) Act, 1957, through which the Centre introduced provisions to enable the creation of mineral exchanges. 

While the amendments provided the enabling framework, they did not spell out the operational details. The draft Mineral Exchange Rules, 2026, released on March 19, now seek to bridge that gap by laying down the structure for registration, governance, trading, and oversight of such exchanges. The mines ministry has invited comments from stakeholders by April 18 before finalising the framework. 

The Rules aim to bring existing mineral trading platforms under a formal framework, requiring them to register as exchanges within six months of the first exchange becoming operational or shutting down. The move is aimed at consolidating a fragmented ecosystem into a regulated electronic marketplace for delivery-based mineral contracts.

 

A key feature of the draft is the introduction of strict market surveillance and anti-manipulation provisions. The framework explicitly prohibits cartelisation, insider trading, and circular trading, and requires exchanges to maintain automated audit trails and dedicated surveillance systems to track price movements, trading patterns, and dominant participants.

 

In a push for transparency, exchanges will be required to publicly disclose price data, including maximum, minimum, and average traded prices, along with demand-supply trends and historical data.

 

The draft also sets high entry barriers, including a minimum net worth requirement of ₹50 crore and tight ownership restrictions, to prevent concentration of control. Governance norms prohibit exchange members from serving on boards.

 

To strengthen market integrity, exchanges will be required to set up settlement guarantee funds and robust risk management systems to handle defaults and ensure smooth clearing and settlement of trades.