EU Blinks: India Wins Clearing House Supervision Battle

In a significant regulatory development, the European Securities and Markets Authority (Esma) has withdrawn its demand to supervise the Clearing Corp. of India Ltd (CCIL). This resolution follows a three-year standoff and was formalized with a memorandum of understanding signed between Esma and the Reserve Bank of India (RBI) on January 27. Esma's previous decision in May 2023 to withdraw recognition for six Indian clearing houses, including CCIL, had threatened to increase costs for European banks. The agreement signifies a win for India, with Esma agreeing to rely on the RBI's supervisory expertise for CCIL. While CCIL has been granted recognition, five other Indian clearing houses are still in discussions with Esma for re-recognition. Efforts are also underway to address the issue of CCIL having to apply for recognition, with Esma intending to incorporate India's concerns regarding extraterritoriality in future regulations. This move aims to prevent regulatory interference between jurisdictions and ensure smoother functioning of clearing houses. Other regulators like Sebi and Ifsca are also in talks with Esma for similar information-sharing agreements, potentially leading to the re-recognition of the remaining five Indian clearing houses within the next 60 days.