RBI and ESMA sign MoU on cooperation and exchange of information for the recognition of central counterparties

This MoU is part of the list of outcomes during the visit of the President of the European Council (Antonio Costa) and the President of the European Commission (Ursula von der Leyen) to India. | Photo credit: FRANCIS MASCARENHAS

This step is important as it will facilitate capital flows into the Indian financial markets from European Union (EU) countries. It comes amid FPIs being sold on Indian stock markets due to high tariffs imposed by the Trump regime on Indian exports, the geopolitical implications of the US takeover of Venezuela’s president and his wife and threats to acquire Greenland, among others.

CCPs position themselves between counterparties to traded contracts, becoming buyers for every seller and seller for every buyer.

This MoU is part of the list of outcomes during the visit of the President of the European Council (Antonio Costa) and the President of the European Commission (Ursula von der Leyen) to India.

In October 2022, ESMA, the EU financial markets regulator and regulator, announced that the recognition decisions of six India-based CCPs will be revoked in accordance with the European Market Infrastructure Regulation (EMIR).

Six entities

The six entities included the Clearing Corporation of India (CCIL), supervised by RBI; Indian Clearing Corporation Ltd, NSE Clearing Corporation Ltd and Multi Commodity Exchange Clearing Corporation Ltd (all supervised by the Securities and Exchange Board of India (SEBI); and India International Clearing Corporation (IFSC) Ltd and NSE IFSC Clearing Corporation Ltd (all supervised by the International Financial Services Center Authority (IFSCA).

The central bank said the MoU, which replaces an earlier MoU between RBI and ESMA entered into on February 28, 2017, enables RBI and ESMA to cooperate in respect of CCPs, in accordance with their respective laws and regulations. It creates a framework for ESMA to place confidence in RBI’s regulatory and supervisory activities while safeguarding the financial stability of the European Union.

The Central Bank of India emphasized that the MoU also demonstrates the importance of cross-border cooperation to facilitate international clearing activities.

ESMA noted that this agreement represents an important step towards restoring access for EU clearing members to Indian central counterparties and follows two years of continued cooperation between ESMA and RBI.

The Authority said this reflects its strong commitment to international supervisory cooperation and mutual support to promote safe, resilient and open financial markets.

ESMA emphasized that the MoU is an important requirement under Article 25 of EMIR for ESMA’s recognition of third-country CCPs. This will allow the CCIL, a CCP based in India and supervised by RBI, to reapply for recognition under EMIR.

The Authority said in a statement that it is also continuing discussions with the Securities and Exchange Board of India (SEBI) and the International Financial Services Centers Authority (IFSCA) to enter into similar collaboration arrangements.

At a post-monetary policy press conference in December 2023, RBI Deputy Governor T. Rabi Sankar underlined that the MoUs or agreements relating to market infrastructure agencies like CCIL must be backed by the word used in the ESMA regulations: cooperation.

“They should be cooperation documents. We believe that they should follow the principle of mutual respect and the principle of mutual trust. They should also be characterized by the principle of respect for local regulations.

“In other words, we are not comfortable anywhere with the regulations characterized by extra-territorial jurisdiction. The arrangement we signed with the Bank of England is on the website. You would have gone through it. You would have noticed the emphasis on respect and cooperation,” Sankar then said.

Published on January 27, 2026