“The Memorandum of Understanding (MoU) establishes a framework for the Bank of England to place reliance on the Reserve Bank of India’s (RBI) regulatory and supervisory activities while safeguarding UK’s financial stability,” the RBI said in a statement.
The Reserve Bank of India (RBI) on Friday signed an agreement with the Bank of England on information exchange regarding bond settlement house Clearing Corporation of India (CCIL).
“The Memorandum of Understanding (MoU) establishes a framework for the Bank of England to place reliance on the Reserve Bank of India’s (RBI) regulatory and supervisory activities while safeguarding UK’s financial stability,” the RBI said in a statement.
It also demonstrates the importance of cross-border cooperation to facilitate international clearing activities and the BoE’s commitment to deference to other regulators’ regimes.
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The RBI in its statement said the MoU confirms the interests of both the authorities in enhancing cooperation in line with their respective laws and regulations. It will also enable the BoE to assess the application of CCIL for recognition as a third country Central Counterparty (CCP) which is a pre-requisite for UK based banks to clear transactions through CCIL.
Reports suggested that in September, RBI was in advanced talks with the European Securities and Markets Authority (ESMA) over the dispute surrounding oversight of the CCIL.
In October 2022, six Indian clearing houses, including the CCIL, which contains the platform for trading in government bonds and overnight indexed swaps (OIS), were de-recognized by the ESMA.
The RBI’s refusal to grant foreign authorities the power to inspect and audit the CCIL led to the decision, which was followed by a similar one by the Bank of England.
In June, the UK Treasury granted equivalence to central counterparties authorised by the RBI, a crucial step towards ending the impasse.
Last year, RBI Governor, Shaktikanta Das, urged international organisations to respect the robustness of Indian legislation.
The RBI and the Financial Services Agency (FSA), Japan, exchanged letters of cooperation in the area of central counterparties (CCPs) in November 2022.
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