NEW DELHI: The Reserve Bank of India (RBI) and the Bank of England (BoE) on Friday signed a Memorandum of Understanding (MoU) for cooperation and exchange of information in relation to the Clearing Corporation of India Limited (CCIL).
The MoU signals the end of deadlock between the Indian and European regulator over the supervisory authority on Indian clearing houses. According to an RBI statement, the MoU establishes a framework for the BoE to place reliance on RBI’s regulatory and supervisory activities while safeguarding UK financial stability.
“The MoU also demonstrates the importance of cross-border cooperation to facilitate international clearing activities and the BoE’s commitment to deference to other regulators’ regimes,” said the RBI statement. The MoU was signed by RBI Deputy Governor T Rabi Sankar and BoE Deputy Governor for Financial Stability Sarah Breeden in London.
According to the RBI, the MoU confirms the interests of both the authorities in enhancing cooperation in line with their respective laws and regulations. It will also enable the BoE to assess the application of CCIL for recognition as a third country Central Counterparty (CCP) which is a pre-requisite for UK based banks to clear transactions through CCIL.
The European Securities and Markets Authority (ESMA) in May had de-recognised six Indian clearing houses over non-compliance with European Market Infrastructure Regulation norms. These six clearing corporations include the Clearing Corporation of India (CCIL), Indian Clearing Corporation, NSE Clearing, Multi Commodity Exchange Clearing, India International Clearing Corporation, and NSE IFSC Clearing Corporation.
Clearing corporations provide guaranteed clearing and settlement functions for transactions in money, G-Secs, foreign exchange and derivative markets.