ESMA pitches '17 MoU with RBI for clearing houses
ESMA) is said to have proposed to the Reserve Bank of India to continue their existing Memorandum of Understanding on the treatment of clearing houses, a step that could resolve roadblocks to billions of dollars' worth of bond trading.
The latest communication by Europe's top financial markets regulator to the RBI, made earlier this month, comes amid a standoff between the Indian central bank and European authorities over the latter's requirement of rights of audit and inspection of domestic clearing houses, including The Clearing Corporation of India Ltd (CCIL).
«Around two weeks ago, ESMA put forward the idea of continuing with the current MoU that is in place. The existing framework does have certain provisions for oversight but within a clearly defined understanding that nothing would be done bypassing the RBI,» a person aware of the development said.
«The root of the disagreement that broke out since last year is the EMIR (European Market Infrastructure Regulation) 2 which has far greater provisions of foreign oversight over domestic clearing houses.
It is difficult for all the EU states to come together and change the language of the new proposals,» the person said.
Emails sent to the RBI and the ESMA did not elicit any response till press time.
ESMA had in October 2022 announced the de-recognition of six Indian clearing houses, including the CCIL, which hosts the trading platform for government bonds and overnight indexed swaps. The CCIL is supervised by the RBI.
Earlier this year, however, German, and French financial supervisory authorities took a more relaxed view, providing their country's banks with an extension of the deadline till October 2024 for de-recognition.
European banks with a presence in Indian
