ESMA to withdraw recognition decisions of six central counterparties established in India
The European Securities and Markets Authority (ESMA) announces that six central counterparties (CCPs) established in India will have their recognition decisions withdrawn in accordance with the European Market Infrastructure Regulation (EMIR).
ESMA had to tier and review the recognition of all third country CCPs (TC-CCPs) that had been recognised prior to 21 September 2020, in accordance with EMIR (Article 89(3c)). Among these TC-CCPs, six are in India, namely:
- The Clearing Corporation of India (CCIL), supervised by the Reserve Bank of India (RBI);
- Indian Clearing Corporation Limited (ICCL), supervised by the Securities and Exchange Board of India (SEBI);
- NSE Clearing Limited (NSCCL), supervised by SEBI;
- Multi Commodity Exchange Clearing (MCXCCL), supervised by SEBI;
- India International Clearing Corporation (IFSC) Limited (IICC), supervised by the International Financial Services Centre Authority (IFSCA); and
- NSE IFSC Clearing Corporation Ltd (NICCL), supervised by the IFSCA.
After conducting its assessment, ESMA established that not all of the cumulative conditions under EMIR for the recognition of these six TC-CCPs are met, as no cooperation arrangements (compliant with Article 25(7) of EMIR) have been concluded between ESMA and each of the relevant Indian authorities, i.e. RBI, SEBI and IFSCA. Therefore, the condition under point (c) of Article 25(2) of EMIR is not met.
As a result, ESMA concludes that these TC-CCPs cannot continue to be recognised in the European Union under the currently applicable EMIR regime. As of the date of application of the withdrawal decisions, these TC-CCPs will no longer be able to provide services to clearing members and trading venues established in the EU.
To mitigate the adverse impacts on EU market participants, ESMA will defer the application of the withdrawal decisions until 30 April 2023.