The Reserve Bank of India signed an agreement with the Bank of England (BoE) on exchange of information for settlement of bond trades through Clearing Corporation of India Ltd (CCIL).
Under the new MoU, the BoE will assess and recognize CCIL as a counter party to clear and settle bonds and overnight indexed swap trades done by England-based banks and investors.
The agreement states that “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; they are also based on mutual respect for each jurisdiction’s current regulatory regime and each authority’s supervisory practices." CCP is short for clearing counterparty
In October 2022, the European Securities and Markets Authority (ESMA) had derecognized six Indian clearing houses, including the CCIL, after RBI refused to permit the overseas body the rights of inspection and audit over the domestic clearing house.
However, in June this year, the UK Treasury accorded equivalence to central counterparties authorized by RBI, the first such decision after Brexit. Subsequently, CCIL had filed a fresh application to BoE for recognition as a third-country central counterparty with effect from 31 January this year.