Esma recognises Clearing Corp of India, ending 3-yr regulatory standoff

European regulator restores CCIL's access to EU market participants after RBI and ESMA signed a supervisory cooperation agreement earlier this year

Clearing Corporation of India Ltd (CCIL) on Monday said it had received recognition from the European Securities and Markets Authority (Esma) as a Tier-I third-country central counterparty (TC-CCP).

 

The move — coming about six months after the Reserve Bank of India (RBI) and the European regulator signed a memorandum of understanding (MoU) establishing a framework for supervisory cooperation and information sharing for RBI-regulated central counterparties — enables CCIL to provide clearing services to clearing members and trading venues established in the European Union.

 

It restores European market participants’ access to CCIL, which clears transactions in government securities, foreign exchange, money markets and interest rate derivatives. Esma had withdrawn recognition for Indian central counterparties in April 2023 after cooperation arrangements between the two regulators expired, increasing capital requirements for European banks clearing trades through Indian clearing corporations.

 

The dispute had stemmed from differences over supervisory oversight. Esma had sought direct inspection and audit rights over Indian clearing corporations under revised European Market Infrastructure Regulation (EMIR) requirements, while the RBI had maintained that oversight of domestic financial market infrastructure rested with the Indian regulator.

 

The RBI and Esma had signed the MoU on January 16 this year, paving the way for Indian central counterparties regulated by the Indian central bank to seek recognition under EMIR. The agreement provides for exchange of information and cooperation between the two regulators while recognising the RBI's supervisory framework.

 

The recognition allows European entities to continue accessing CCIL’s clearing services under the EMIR framework.