This MoU is part of the list of outcomes during the visit of President of the European Council (Antonio Costa) and President of the European Commission (Ursula von der Leyen) to India.
| Photo Credit:
FRANCIS MASCARENHAS
After prolonged negotiations, stretching almost two years, the Reserve Bank of India and the European Securities and Markets Authority (ESMA) on Tuesday finally signed a memorandum of understanding (MoU) on cooperation and exchange of information for the recognition of central counterparties (CCPs) regulated and supervised by RBI.
This move is significant as it will facilitate capital flows into the Indian financial markets from European Union (EU) countries. It comes amid FPIs selling in the Indian equity markets due to high tariffs slapped by the Trump regime on India’s exports, geopolitical implications of the US capturing Venzuela President and his wife and threats to acquire Greenland, among others.
CCPs interpose themselves between counterparties to contracts traded, becoming buyer to every seller and seller to every buyer.
This MoU is part of the list of outcomes during the visit of President of the European Council (Antonio Costa) and President of the European Commission (Ursula von der Leyen) to India.
In October 2022, ESMA, EU’s financial markets regulator and supervisor, announced that six CCPs established in India will have their recognition decisions withdrawn in accordance with the European Market Infrastructure Regulation (EMIR).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 (supervised by the International Financial Services Centre Authority (IFSCA).
The central bank said the MoU, replaces an earlier MoU between RBI and ESMA which was entered into on February 28, 2017, enables RBI and ESMA to cooperate regarding CCPs, in line with their respective laws and regulations. It establishes a framework for ESMA to place reliance on RBI’s regulatory and supervisory activities while safeguarding the European Union’s financial stability.
India’s central bank emphasised that the MoU also demonstrates the importance of cross-border cooperation to facilitate international clearing activities.
ESMA observed that this agreement marks a significant step towards restoring access for EU clearing members to Indian central counterparties and follows two years of sustained engagement between ESMA and RBI.
The Authority said this reflects its strong commitment to international supervisory cooperation and mutual support to advance safe, resilient and open financial markets.
ESMA emphasised that the MoU is a key requirement under Article 25 of the EMIR for the recognition by ESMA of third-country CCPs. It allows the CCIL, a CCP established in India and supervised by RBI, to re-apply for recognition under EMIR.
The Authority, in a statement, said it is also continuing discussions with the Securities and Exchange Board of India (SEBI) and the International Financial Services Centres Authority (IFSCA) to conclude similar cooperation arrangements.
In a post monetary policy press conference in December 2023, RBI Deputy Governor T. Rabi Sankar, underscored that the MoUs or agreements with respect to market infrastructure agencies like CCIL should be underpinned by the word that is used in ESMA regulations – cooperation.
“They should be cooperative documents. We believe that they should follow the principle of mutual respect and the principle of mutual trust. They should also be characterised by the principle of deference to local regulations.
“In other words, we are not comfortable with the regulations anywhere which are characterised by extraterritorial jurisdiction. The one we signed with the Bank of England is there on the website. You would have gone through it. You would have noticed that the emphasis is on deference and cooperation,” Sankar then said.
Published on January 27, 2026
