SEBI, ESMA Agreement Opens Path for Indian CCPs to Restore EU Clearing Access

The Securities and Exchange Board of India and the European Securities and Markets Authority signed a memorandum of understanding on Friday that opens a formal route for SEBI-supervised Indian central counterparties to seek renewed access to European Union clearing participants. The agreement does not itself restore that access. Instead, it gives those clearing houses the cooperation framework they need to re-apply for recognition under the European Market Infrastructure Regulation, or EMIR.

ESMA announced the agreement on Sept. 4 and said it was signed to facilitate supervisory cooperation and the exchange of information in relation to central counterparties established in India and supervised by SEBI. In its statement, ESMA described the accord as a significant step toward restoring access for EU clearing members to Indian CCPs after more than two years of discussions with Indian authorities. That phrasing matters because it signals progress, but it also makes clear that recognition decisions for individual CCPs still have to follow.

Central counterparties sit at the core of exchange-traded and cleared markets because they become the buyer to every seller and the seller to every buyer. EU banks, brokers and other clearing participants generally need ESMA recognition when they want to clear through third-country CCPs. Without that recognition, access becomes far harder or impossible for EU members even if the home market’s infrastructure continues operating domestically.

The new MoU creates the framework required for recognition

The agreement signed Friday is not a market-access waiver or a one-line diplomatic statement. The underlying MoU between ESMA and SEBI replaces a 2017 arrangement so that the cooperation framework matches the requirements of amended EMIR. The document says it is intended to support consultation, cooperation and information exchange on Indian CCPs covered by the agreement, while allowing ESMA to monitor whether those CCPs continue to meet recognition conditions.

The MoU defines a covered CCP as a clearing house established in India, authorized by SEBI, that has applied or may apply to ESMA for recognition as a third-country CCP, or one that is already recognized and has not been classified by ESMA as systemically important. It also states that SEBI remains accountable in India for the resilience of the CCPs it supervises, while ESMA may rely on the Indian regulatory framework and home-country supervision as appropriate within its own responsibilities.

That structure is important because EMIR recognition depends on more than one legal box being ticked. ESMA needs a cooperation arrangement with the relevant home supervisor, an applicable equivalence decision from the European Commission for the third-country framework, and effective supervision and enforcement in the home jurisdiction. The MoU notes that the European Commission’s 2016 equivalence decision for India’s CCP framework remains part of that architecture. Friday’s agreement therefore repairs a missing link rather than creating an entirely new regime from scratch.

The text also makes clear that the MoU itself is not legally binding and does not override domestic law. Instead, it sets out how the two authorities intend to cooperate, exchange information, respond in emergency situations and channel requests. In practical terms, that is exactly the kind of supervisory plumbing that cross-border market access often depends on.

Why the path had been blocked for SEBI-supervised Indian CCPs

This development is best understood against the background of ESMA’s earlier decision to withdraw recognition from Indian clearing houses after the old cooperation setup no longer matched EMIR’s revised requirements. ESMA said in October 2022 that it would withdraw the recognition decisions of six Indian CCPs because no agreement on a revised MoU had been reached with the Indian authorities in charge of their supervision. The authority delayed the application of those withdrawal decisions until April 30, 2023 to reduce disruption for EU market participants.

That earlier break in recognition affected Indian CCP access from the European side even though the clearing corporations themselves continued operating in their home market. Over time, the position began to change authority by authority. ESMA said on July 1 that it had recognised the Clearing Corporation of India Limited as a Tier 1 third-country CCP after signing a separate MoU with the Reserve Bank of India earlier this year, allowing CCIL to provide clearing services to EU clearing members and trading venues once again. That RBI-linked recognition did not solve the situation for SEBI-supervised clearing corporations, which is why Friday’s SEBI agreement matters.

The SEBI-supervised CCPs most directly affected by the new opening are expected to include Indian Clearing Corporation Limited, NSE Clearing Limited and Multi Commodity Exchange Clearing Corporation Limited, all of which serve important segments of India’s securities and derivatives markets. Friday’s step does not automatically put them back on ESMA’s recognised list, but it puts in place the supervisory cooperation arrangement they need in order to make that case.

What comes next for EU firms and Indian clearing houses

The immediate next step is straightforward in principle but still subject to regulatory review. ESMA said the MoU will allow CCPs established in India and supervised by SEBI to re-apply for recognition under EMIR. Each application will still have to be assessed on its merits, and recognition decisions would come later. That means EU clearing members do not regain access merely because the MoU was signed on Friday.

Even so, the policy signal is meaningful. A functioning route back to recognition reduces uncertainty for market participants that clear Indian securities or commodity derivatives and want to maintain cross-border access through regulated infrastructure rather than through improvised workarounds. It also shows that India and the EU continue to treat post-trade market access as a supervisory-cooperation issue that can be solved institutionally, not only politically.

Friday’s announcement also points to unfinished work. ESMA said it is continuing discussions with the International Financial Services Centres Authority, or IFSCA, with a view to concluding a similar cooperation arrangement. That suggests the wider process of rebuilding or maintaining EU access across the different layers of Indian market infrastructure is still continuing authority by authority.

For investors, brokers and exchanges, the main takeaway is that the door has reopened but the room has not yet been entered. SEBI and ESMA now have the cooperation document that EMIR recognition requires for SEBI-supervised Indian CCPs. Whether that translates into restored live access for EU firms will depend on how quickly the relevant clearing corporations re-apply and how ESMA rules on those applications.