RBI, BoE sign MoU for cooperation, information exchange on CCIL

Informist, Friday, Dec 1, 2023


–RBI: Signed MoU with BoE on information exchange related to CCIL

–RBI: BoE to rely on RBI's regulation, supervision over CCIL

–RBI: MoU with BoE on CCIL cooperation safeguards UK fincl stability

–RBI:BoE to assess CCIL proposal as 3rd-country central counterparty

–CONTEXT:CCIL applied to BoE for 3rd-country central counterparty Jan


NEW DELHI – The Reserve Bank of India and the Bank of England today signed a memorandum of understanding concerning cooperation and exchange of information in relation to the Clearing Corp of India Ltd. 


"The MoU establishes a framework for the BoE to place reliance on RBI’s regulatory and supervisory activities while safeguarding UK financial stability," the RBI said in a release.


The accord is valid from its signing today, and covers central counterparties that are not potentially systemic to the UK. The BoE will consider whether the RBI and its regulated entities deserve recognition under the European securities market law, which mandates that European regulators have direct oversight over the central counterparties.


The Indian clearing house, which hosts the domestic government bond and derivatives trading market in tandem with the RBI, is scheduled to be de-recognised by the UK financial regulator on Dec 30, 2025.


"It is the mutual understanding of the RBI and the BoE that the cooperation arrangements specified under this MoU recognise the primacy of the RBI and its mandate in the supervision of Covered CCPs (central counterparties); they are also based on mutual respect for each jurisdiction’s current regulatory regime and each authority’s supervisory practices," the memorandum said.


Both regulators can amend or expand the scope of cooperation. The RBI will cooperate with the UK regulators to assure the BoE that its statutory objective is met, it said.


Officials from either central bank can request meetings to discuss the functions of covered central counterparties. The BoE can request information from the RBI on an ad-hoc basis, as well as particular information on regulatory changes to the central counterparties every three years. 


The European Securities and Markets Authority had on Oct 31, 2022, announced that it planned to de-recognise six Indian clearing houses, including the Clearing Corp of India from Apr 30, 2023, and confirmed their de-recognition on May 2, 2023. However, national regulators in some parts of Europe have allowed banks to trade on the Clearing Corp of India platform without paying any penal charges to European Securities and Markets Authority until October 2024.


Both the BoE and the European regulator operate under the European Market Infrastructure Regulation.


The Indian government is in contact with the European Union authorities as well as some of the key country authorities in the region to facilitate a solution, Department of Economic Affairs Secretary Ajay Seth told Informist in September. "They (the Reserve Bank of India and European Securities and Markets Authority) are in a constructive discussion," he had said.  End


Reported by Aaryan Khanna

Edited by Saji George Titus


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