RBI & EU's ESMA Sign New Pact for Clearing House Cooperation

New Delhi: In a significant move to strengthen cross-border financial stability and cooperation, the Reserve Bank of India (RBI) and the European Securities and Markets Authority (ESMA) have signed a new Memorandum of Understanding (MoU). The agreement, signed on January 27, 2026, updates a previous pact from 2017 and focuses on the regulation and supervision of Central Counterparties (CCPs).

What are CCPs and Why is this MoU Important?

CCPs, or clearing houses, are critical financial market infrastructure. They stand between buyers and sellers in transactions, ensuring the completion of trades even if one party defaults. This reduces systemic risk. Major global banks and financial institutions rely on CCPs in different jurisdictions.

Key Aspects of the New RBI-ESMA MoU:

Regulatory Reliance: The MoU establishes a formal framework for ESMA to place reliance on the regulatory and supervisory activities of the RBI for CCPs regulated in India. This is crucial for Indian CCPs, like the Clearing Corporation of India Limited (CCIL), seeking recognition to operate in the European Union.
Information Exchange: It facilitates cooperation and the exchange of information between the two regulators, in line with their respective laws. This enhances supervisory oversight of cross-border clearing activities.
Safeguarding Financial Stability: A core objective is to safeguard the financial stability of the European Union while acknowledging the robustness of India's regulatory framework.
Facilitating International Clearing: The agreement underscores the importance of international cooperation to enable smooth and secure cross-border clearing activities, which are vital for global finance.

Context and Implications:

This agreement comes against the backdrop of ESMA's 2022 move to withdraw recognition of several Indian CCPs, including CCIL, due to a disagreement over the RBI's denial of direct supervisory access to European regulators. The new MoU appears to be a diplomatic and regulatory resolution, creating a pathway for Indian CCPs to regain access to the lucrative European market.

It signifies growing international trust in India's financial regulatory system and strengthens the position of Mumbai as a global financial center. For European banks, it provides continued legal certainty for their extensive clearing activities in India.

The MoU was signed by RBI Executive Director Vivek Deep and ESMA Chair Verena Ross.