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The Mines and Minerals (Development and Regulation) Act, 1957 (act), as amended in 2025, introduced the concept of mineral exchanges. These are electronic trading platforms through which buyers and sellers transact and enter into contracts. Coal, a notified mineral under the act, is an early subject of this framework.

In September 2025, the Ministry of Coal released the for public consultation, followed by a in December. These draft rules set up a structured coal trading ecosystem through standardised coal supply contracts and their execution on a regulated exchange platform. The existing fragmented contractual and auction-based channels are now replaced by centralised trading in a neutral electronic marketplace, aided by transparent bidding and regulatory oversight.

Coal exchange rules: Price discovery

The framework introduces fair and efficient price discovery, improves the dissemination of market information, and supports timely and reliable coal supply. The draft rules apply only to delivery-based contracts, emphasising physical coal transactions rather than financial trading. Mandatory quality verification by a panel of coal sampling agencies will ensure reliability of supply.

A key of the draft rules is price discovery, which is required to occur through an authority-approved auction mechanism looking to maximise economic surplus. Pricing is not an exchange discretion because discovery methodologies must be approved. The final coal price is adjusted for quality, based on certification issued by the coal sampling agencies.

CCO coal exchange registration rules

The Coal Controller Organisation (CCO), a statutory body under the Ministry of Coal, is the authority registering, regulating and overseeing such coal exchanges.

Establishing and operating an exchange will be restricted to companies incorporated under the Companies Act, 2013 and structured as demutualised entities. This creates a separation between ownership, management and trading rights. Applicants must be worth at least INR1 billion (USD11 million) net and not drop below that figure at all times. Registration involves regulatory scrutiny and public disclosure of applicants for stakeholder comment. During registration, charter documents, financial statements, project reports, business plans, draft by-laws and articles of association must be submitted. Registration, once granted, is valid for 25 years and may be renewed. Coal exchange ownership restrictions will prevent concentration of control and conflicts of interest. No member of a coal exchange may, individually or with associates, affiliates or those acting in concert, acquire or hold more than 5% of its paid-up equity shares. The aggregate shareholding of all members is capped at 49%. After five years from the authorisation of the coal exchange, no person may hold more than 25% of the paid-up equity share capital. Any holding exceeding this specified limit must be divested within a prescribed timeline.

Such ownership limits are enforced by requiring parity of independent and shareholder directors on the board, and by forbidding members, clients and their associates from exercising managerial control or being employed by the exchange.

Coal exchanges face extensive transparency and disclosure obligations, including prior regulatory approval for amendments to articles of association, disclosure of shareholding patterns, board composition and membership and fee structures. They must report, periodically, on trades, bids and financial status. Mandatory internal committees for risk management, settlement guarantee oversight and market surveillance, will oversee these requirements, each operating under independent oversight.

CCO powers to police coal

The CCO has wide supervisory and enforcement powers to curb market manipulation, insider trading, cartelisation and abuse of dominance. In exceptional circumstances, such as abnormal price movements or sudden surges in transaction volumes, the CCO may intervene by imposing price caps or floors, suspending trading and regulating transaction fees. These powers may seem regulatory overreach, but they reflect a cautious approach to bringing market mechanisms to a sector long under state control. By creating a regulated exchange mechanism for coal, the draft rules introduce long-needed transparency and standardisation in coal sales and pricing. Consultation will be crucial to producing a framework that preserves market integrity and stability while enabling efficient price discovery and reliable physical supply.

Utkarsh Mishra is a senior associate and Muskaan Chugh is an associate at Sarthak Advocates & Solicitors