India's Sovereign Debt Clearinghouse Applies for European Recognition

Sovereign debt clearinghouse sent an application to European authorities to be recognized as a permitted trading counterparty, according to people familiar with the developments. The Clearing Corp. sent an application earlier this month to the European Securities and Markets Authority for recognition under European market infrastructure guidelines, the people said, asking not to be named discussing private matters.

A final decision on the application is yet to be made, they added. An ESMA spokesperson declined to comment on the matter. CCIL didn’t respond to an email seeking comment.

And the Reserve Bank

Of India signed an agreement in late January. The agreement ended a yearslong dispute about oversight of the central bank-supervised clearinghouse. The Reserve Bank of India maintained that demands for access to the books of the clearing house interfered with domestic regulations.

ESMA announced the withdrawal of CCIL’s recognition in October 2022. The clearinghouse deals with government bond, money market and derivatives transactions.

Banks are key market-makers for Indian bonds and derivatives. European banks are currently able to work with CCIL. Trading with unrecognized clearinghouses triggers additional charges. The move comes amid growing integration of global debt markets, with the application potentially paving the way for lenders like Deutsche Bank AG and BNP Paribas SA to trade bonds more easily in the country, according to the people familiar.