MUMBAI, Jan 27 (Reuters) — India’s central bank and the European Securities and Markets Authority have signed a memorandum of understanding, ending a two-year standoff over supervisory oversight of Indian central clearing agencies.
ESMA said in a statement on Tuesday that the agreement will facilitate cooperation and information exchange, paving the way for the recognition of central counterparties based in India and regulated by the Reserve Bank of India.
The European authority had withdrawn recognition for six Indian clearing houses after regulatory issues remained unresolved. It granted European financial institutions limited access to those entities to ensure continuity while talks with the RBI continued.
European banks faced higher capital charges for exposures linked to Indian clearing houses during the period.
The MoU allows the Clearing Corporation of India to re-apply for recognition under European Market Infrastructure Regulation, ESMA said in the statement.
This «establishes a framework for ESMA to place reliance on RBI’s regulatory and supervisory activities while safeguarding the European Union’s financial stability,» the Indian central bank said.
The agreement was signed alongside ongoing India-EU trade discussions, under which both sides have pledged to lower tariffs on a wide range of goods to boost bilateral trade.
(Reporting by Gopika Gopakumar; Editing by Tasim Zahid)