The MoU establishes a statement of intent between RBI and ESMA, focusing on covered CCPs and their compliance with recognition conditions. Both authorities will collaborate in regulatory and supervisory practices to the extent permitted by their respective legal frameworks. While the MoU encourages information sharing and mutual consultation, it does not create legally binding obligations or confer rights beyond existing domestic laws.
Implications for Indian CCPs
Formal recognition by ESMA will enhance the credibility of CCIL and other Indian CCPs in international markets. This recognition is expected to facilitate smoother cross-border financial transactions and strengthen the operational framework of Indian clearing houses. The collaboration also underscores India’s growing role in the global financial ecosystem and supports harmonized regulatory practices with European standards.
MoU Duration and Legal Framework
The MoU is effective from the date of signing and will remain operative indefinitely. It is intended as a cooperative framework rather than a legally enforceable treaty, ensuring that RBI retains ultimate responsibility for the oversight and resilience of CCPs in India. The agreement emphasizes trust-based governance and information sharing, providing a foundation for ongoing dialogue between Indian and European regulators.
Strategic Significance
This partnership between RBI and ESMA aligns with India’s broader objective of strengthening international regulatory cooperation in financial markets. By enabling recognition of Indian CCPs in Europe, the MoU supports cross-border investment, enhances financial stability, and reinforces India’s commitment to robust governance and transparency in the clearing and settlement ecosystem.