The SEBI ESMA MoU will strengthen regulatory cooperation and information exchange on central counterparties (CCPs). The agreement between the Securities and Exchange Board of India (SEBI) and the European Securities and Markets Authority (ESMA) provides an updated framework for cross-border clearing activities while supporting financial stability.
The new pact replaces the earlier agreement signed in June 2017.
SEBI ESMA MoU Updates CCP Regulatory Cooperation
The new MoU covers CCPs regulated and supervised by SEBI under the applicable laws and regulations of the two jurisdictions.
The agreement allows ESMA to rely on SEBI’s regulatory and supervisory activities concerning Indian CCPs. It also includes safeguards aimed at protecting the financial stability of the European Union.
The updated framework is expected to improve coordination between the Indian and European regulators as financial market linkages expand.
CCP Cooperation Supports Global Financial Markets
Central counterparties play a critical role in financial market infrastructure. They stand between buyers and sellers in financial transactions and help manage counterparty risk.
Effective regulatory coordination is important when clearing activities cross national borders. Strong information-sharing arrangements can help regulators monitor risks and maintain confidence in interconnected financial markets.
SEBI and ESMA Strengthen Information Exchange
The MoU was signed by SEBI Chairman Tuhin Kanta Pandey and ESMA Chair Verena Ross.
The agreement provides a framework for cooperation on supervisory matters and information exchange involving Indian CCPs with international market linkages.
It also supports closer coordination between the two regulators on matters linked to international clearing activities.
SEBI Proposes Changes to Mutual Fund Settlement
Separately, SEBI has proposed allowing mutual fund schemes to net certain cash-market fund obligations. The proposal aims to reduce temporary funding requirements and improve settlement efficiency.
Under the proposed framework, eligible purchases could be offset against eligible sales within the same settlement cycle. The underlying securities would continue to be settled on a gross basis.
The SEBI ESMA MoU marks an important step in strengthening regulatory coordination between India and Europe. It supports information exchange, cross-border clearing and greater confidence in international financial market infrastructure.
Source: Sarkaritel
