RBI-ESMA Talks on Clearing House Oversight to Extend Beyond October Deadline

RBI-ESMA Talks on Clearing House Oversight to Extend Beyond October Deadline

Negotiations between the Reserve Bank of India (RBI) and the European Securities and Markets Authority (ESMA) over the oversight of Indian clearing houses will continue beyond October, with no new deadline set by ESMA. European banks operating in India, including BNP Paribas, Societe Generale, and Deutsche Bank, will maintain their transactions with Indian clearing houses despite the absence of an agreement.

Ongoing Negotiations and Regulatory Dispute

Discussions between the RBI and ESMA are focused on the latter's request for powers to inspect Indian clearing corporations, a demand the RBI has resisted, citing concerns over extra-territorial jurisdiction. ESMA had previously revoked recognition of six Indian central counterparties (CCPs) in May 2023, posing potential operational challenges for European banks. However, the talks remain unresolved.

In response, European banks in India may consider using local Indian banks as intermediaries to continue operations, though experts warn this could lead to higher operational costs. Government-level talks between the European Union and India are also expected to proceed in parallel to the RBI-ESMA discussions.

The Indian clearing houses affected by ESMA's de-recognition include Clearing Corporation of India, Indian Clearing Corporation, India International Clearing Corporation, NSE Clearing, NSE IFSC Clearing Corporation, and Multi Commodity Exchange Clearing Corporation.