India’s sovereign debt clearinghouse, the Clearing Corp. of India Ltd. (CCIL), has submitted an application to European authorities seeking recognition as a permitted trading counterparty. This move could facilitate easier bond trading for international lenders such as Deutsche Bank AG and BNP Paribas SA within the Indian market.
The application, filed earlier this month with the European Securities and Markets Authority (ESMA), aims for recognition under European market infrastructure regulations. Sources with knowledge of the situation, who requested anonymity due to the private nature of the discussions, noted that a final decision from ESMA has yet to be reached.
An ESMA spokesperson declined to comment on the application, and CCIL did not respond to requests for comment.
This initiative follows a recent accord between ESMA and the Reserve Bank of India (RBI), reached in January, which resolved a lengthy dispute regarding the oversight of the central bank-supervised clearinghouse. The disagreement stemmed from ESMA’s persistent requests for access to CCIL’s financial records, which the RBI argued would conflict with domestic regulations. Notably, ESMA had previously withdrawn CCIL’s recognition in October 2022.
European banks play a crucial role as market-makers for Indian bonds and derivatives. Although these banks can currently engage with CCIL, trading with non-recognized clearinghouses incurs additional costs, making this recognition significant for improving trading efficiency in the region.
