Mumbai: The Bank of England (BoE) has recognised the Clearing Corporation of India (CCIL) as a non-UK central counterparty, officially resolving a regulatory roadblock that sprang up a year ago and threatened to stall UK banks’ trading activity in domestic bond and derivatives markets. In an update on its website, the BoE said that the date of recognition for the CCIL was December 15, 2023, while listing out the classes of financial instruments that the local clearing house has been recognised to provide clearing services for in the UK. The BoE listed the home authority as the RBI, which is the supervisor of the CCIL.”This marks the final step in the process and follows months of constructive engagement between authorities and market participants across the two jurisdictions. The decision enables UK banks operating in India to continue partnering with our domestic and international clients, for their investment and risk management needs, in an efficient manner,” said Siddharth Bachhawat, head – markets, India, Barclays.
The classes of instruments that the CCIL can provide clearing services for in the UK include debt and equity securities, interest rate and currency derivatives and debt repos, the BoE said.
The move follows the signing of the Memorandum of Understanding between the BoE and the RBI on December 1. The MoU established a framework for the UK central bank to place reliance on the Indian central bank’s regulatory and supervisory activities while safeguarding UK financial stability.
In October 2022, the European Securities and Markets Authority had de-recognised the CCIL following the RBI’s refusal to permit rights of inspection and audit over the local clearing house, which hosts the platform for trading in Indian government bonds and interest rate derivatives.
Subsequently, the CCIL was also placed on a runoff regime in the UK pending a fresh application for recognition to the Bank of England in a post-Brexit UK.
CCIL said in June of this year that it had made an application to the Bank of England for recognition as a third-country central counterparty on 31st January 2023.
The official recognition of the CCIL is a relief to UK-based banks Standard Chartered, Barclays and HSBC, which are all large players in the domestic bond and derivatives markets as well as custodians of foreign investment flows into India.
