RBI-ESMA agreement allows CCIL to reapply for latter's recognition

CCIL can re-apply for recognition; Esma in talks with Sebi, IFSCA for similar agreement

The Clearing Corporation of India (CCIL) will be able to reapply for recognition by the European Union’s financial markets regulator following a pact signed on Tuesday between the Reserve Bank of India (RBI) and the European Securities and Markets Authority (Esma).

 

The impasse between the RBI and the EU regulator began in October 2022, when Esma sought direct audit and inspection rights over CCIL for trades conducted by European banks. The RBI pushed back, making it clear that Esma’s position was “extra-jurisdictional” and made it clear that it would not accede to such demands.

 

In a joint statement issued on Tuesday, the authorities said the Indian central bank and Esma — the EU’s financial markets regulator and supervisor — have signed an agreement to facilitate cooperation and the exchange of information for the recognition of central counterparties (CCPs) established in India and supervised by the RBI.

 

 

In a separate statement, Esma said the pact was a key requirement under Article 25 of the European Market Infrastructure Regulation (EMIR) for the recognition of third-country CCPs. “It allows CCIL, a CCP established in India and supervised by the RBI, to re-apply for recognition under EMIR,” it said.

 

Esma said it was continuing discussions with the Securities and Exchange Board of India (Sebi) and the International Financial Services Centres Authority (IFSCA) to conclude similar cooperation arrangements.

 

Tuesday’s agreement is part of a broader free trade pact signed after nearly two decades of negotiations aimed at deepening economic ties between India and the European Union.

 

“This agreement marks a significant step towards restoring access for EU clearing members to Indian central counterparties and follows two years of sustained engagement between Esma and the RBI,” Esma said in its statement.

 

It reflects Esma’s strong commitment to international supervisory cooperation and mutual support to advance safe, resilient and open financial markets, the regulator added.

 

The memorandum of understanding (MoU) was signed by RBI Executive Director Vivek Deep and Esma Chair Verena Ross.

 

The MoU, which replaces an earlier agreement entered into on February 28, 2017, enables the RBI and Esma to cooperate on CCP oversight in line with their respective laws and regulations, the RBI said.

 

The RBI said the agreement establishes a framework under which Esma can place reliance on the central bank’s regulatory and supervisory activities, while safeguarding the European Union’s financial stability.

 

“The MoU also demonstrates the importance of cross-border cooperation to facilitate international clearing activities,” the RBI said.