RBI, ESMA sign MoU on Cooperation and Exchange of Information

• 29 Jan 2026
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On 27 January 2026, after almost two years of extensive negotiations, the Reserve Bank of India (RBI) and the European Securities and Markets Authority (ESMA) finally signed a memorandum of understanding (MoU) with each other. This agreement focuses on cooperation and the exchange of information regarding the recognition of central counterparties (CCPs) that are regulated and supervised by the RBI. 

This development is quite significant for the Indian economy. It will promote capital flow into the Indian financial markets from countries within the European Union. The agreement comes at a time when foreign portfolio investors (FPIs) have been selling off their shares in the Indian equity markets. Contributing factors to this trend include high tariffs imposed by the Trump administration on Indian exports, geopolitical tensions surrounding the U.S. involvement in Venezuela and threats related to acquiring Greenland among other issues.

The CCPs interpose themselves between counterparties to contracts traded. They serve as buyer to every seller and seller to every buyer. This MoU is one of the outcomes from the visit of the President of the European Council, Antonio Costa, and the President of the European Commission, Ursula von der Leyen, to India. A few years back, in October 2022, the European Securities and Markets Authority (ESMA), i.e., the authority which oversees the EU's financial markets, had announced that it would withdraw recognition of six CCPs that are based in India. 

This decision was made in accordance with the European Market Infrastructure Regulation (EMIR). The six entities affected by this decision include the Clearing Corporation of India (CCIL), which is supervised by the Reserve Bank of India (RBI); Indian Clearing Corporation Ltd; NSE Clearing Corporation Ltd; and Multi Commodity Exchange Clearing Corporation Ltd, all of which are supervised by the Securities and Exchange Board of India (SEBI). 

Additionally, India International Clearing Corporation (IFSC) Ltd and NSE IFSC Clearing Corporation Ltd, which are supervised by the International Financial Services Centres Authority (IFSCA), are also included. The RBI mentioned the MoU replaces an earlier MoU between the ESMA and the central bank which was entered into on 28 February 2017. It enables RBI as well as ESMA to cooperate regarding the CCPs in line with their respective laws as well as the respective regulations. It establishes a framework for ESMA to place reliance on RBI’s regulatory and supervisory activities while protecting financial stability of EU.

Source: The Hindu Business Line