Brief Overview:
Memorandum of Understanding (“MoU”) on cooperation and exchange of information in relation to the Clearing Corporation of India Limited (“CCIL”) has been signed between the Reserve Bank of India (“RBI”) and Bank of England (“BoE”).
Technical Details:
The MoU determines the framework for the BoE to rely on the RBI’s regulatory and supervisory activities while safeguarding UK financial stability. With this MoU being signed, BoE can now assess CCIL’s application for recognition as a third country central counterparty (“CCP”) which is a pre-requisite for UK Banks to clear the transactions on CCIL.
JC Key Takeaways:
1) Amidst the derecognition of Indian CCPs by ESMA, news of signing this MoU with BoE is indeed a positive development. It seems that the UK authorities are comfortable to not have audit rights over the Indian clearing houses.
2) Only time will tell whether this would nudge the ESMA too to follow suit.
For further details, please see:
https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=56889
For any queries/clarifications, please feel free to ping us and we will be happy to chat:
● Smrithi Nair (smrithi.nair@jclex.com)
●Mahak Saboo (mahak.saboo@jclex.com)
