The Bank of England and the Reserve Bank of India have signed a Memorandum of Understanding (MoU) concerning cooperation and exchange of information in relation to the Clearing Corporation of India (CCIL).
The MoU establishes a framework for the BoE to place reliance on the RBI’s regulatory and supervisory activities while safeguarding UK financial stability.
It also aims to demonstrate the importance of cross-border cooperation to facilitate international clearing activities and the BoE’s commitment to deference to other regulators’ regimes where justified.
According to the BoE, the document “satisfies the requirement under Article 25 (7) of the UK European Market Infrastructure Regulation (EMIR)”, which will allow the BoE to assess the CCIL application for UK recognition.
The news comes a year after the European Securities and Markets Authority (ESMA) withdrew third-country CCP recognition of six Indian central counterparties under EMIR, with this decision taking effect from 30 April 2023.
The six CCPs included RBI-supervised CCIL, the Indian Clearing Corporation Ltd (ICCL) and NSE Clearing Ltd (NSCLL).
On the basis of its assessment, the European securities market regulator concluded that the cumulative conditions for recognising these third-country CCPs under EMIR have not been met since no cooperation agreements have been established between ESMA and the relevant Indian market authorities in accordance with EMIR Article 25(7).
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