ESMA and SEBI Sign Cooperation Pact Opening Path for Indian Clearing Houses

The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, signed a Memorandum of Understanding with the Securities and Exchange Board of India (SEBI) on September 4, 2026, establishing cooperation and information exchange arrangements for central counterparties (CCPs) established in India and supervised by SEBI. The agreement allows those CCPs to re-apply for recognition under the European Market Infrastructure Regulation (EMIR), for which a cooperation arrangement of this kind is a key requirement under Article 25, ESMA announced.

The MoU was signed in Paris by ESMA Chair Verena Ross and SEBI Chairman Tuhin Kanta Pandey, in two originals in English and Hindi, with the English text prevailing in case of divergence. It took force from the date of signature. SEBI’s own statement, numbered PR 54/2026 and dated September 4, 2026, said the agreement establishes a framework for ESMA to place reliance on SEBI’s regulatory and supervisory activities while safeguarding the European Union’s financial stability.

Agreement Terms

The signed MoU replaces an earlier agreement the two authorities entered into on June 21, 2017, reflecting ESMA’s monitoring of ongoing compliance with recognition conditions by Indian CCPs supervised by SEBI. EMIR was subsequently amended, including by Regulation (EU) 2019/2099 of October 23, 2019, and the parties agreed the 2017 MoU had to be revised to reflect the amended requirements. The new MoU is a statement of intent to consult, cooperate and exchange information; it does not create legally binding obligations, confer rights, or supersede domestic laws. It is a bilateral arrangement between SEBI and ESMA, not a collective arrangement with other EU authorities, and applies to both authorities on the basis of reciprocity.

The agreement covers CCPs established in India, authorized by SEBI, that have applied or may apply for ESMA recognition as third-country CCPs, or that are already recognized and have not been determined systemically important or likely to become systemically important under Article 25(2a) of EMIR — Tier 1 CCPs. The document defines a CCP as a legal person that interposes itself between counterparties to contracts traded on one or more financial markets, becoming the buyer to every seller and the seller to every buyer. Under the MoU, ESMA will rely as appropriate on SEBI’s regulatory framework and supervision, while SEBI remains accountable in India for the resilience of the covered CCPs. All ESMA requests for information and cooperation directed to a covered CCP will be submitted through SEBI.

Cooperation covers initial recognition applications, tiering, and periodic and ad-hoc recognition reviews; the period before any withdrawal of recognition; significant changes in a covered CCP’s internal rules, policies and procedures; significant regulatory, supervisory or enforcement actions; and cases where a covered CCP has provided incorrect or misleading information. Each authority must inform the other as soon as practicable of any known material event that could adversely affect a covered CCP’s financial or operational stability, of emergency situations, of significant enforcement actions or sanctions, and of material extensions of a CCP’s activities into current or new asset classes or EU trading venues. In an emergency — defined as an event that could materially impair a covered CCP’s financial or operational condition with possible adverse effects on market liquidity and EU financial stability — SEBI will endeavor to provide all relevant information sought by ESMA, and requests may be made in any form, including orally, if confirmed in writing as soon as possible.

Non-public information obtained by ESMA may be used solely to ensure, monitor or assess a covered CCP’s compliance with applicable laws and regulations; any other use requires SEBI’s prior written consent. Onward disclosure to governmental entities requires notification and written assurances on confidential treatment. The MoU remains in force for an unlimited period, with termination available on thirty calendar days’ written notice. If it is terminated without replacement by an equivalent arrangement in a reasonable timeframe, ESMA, after informing SEBI, will withdraw recognition of the covered CCPs, endeavoring to minimize market disruption with an adaptation period not exceeding two years.

Designated contact persons are Klaus Löber, chair of ESMA’s CCP Supervisory Committee, and independent committee members Nicoletta Giusto and Froukelien Wendt for ESMA, and Executive Director Maninder Cheema, Deputy General Manager Naveen Gupta, and Assistant General Manager Nikhil Chaudhary of SEBI’s Office of International Affairs. An appendix lists the competent authorities of EU member states where a covered CCP provides or intends to provide clearing: France’s AMF, ACPR and Banque de France, and Germany’s BaFin and Deutsche Bundesbank. A separate appendix sets the procedure for central banks of issue to request information on covered CCPs through ESMA.

Path to Recognition

The MoU cites Commission Implementing Decision (EU) 2016/2269 of December 15, 2016, which determined that India’s legal and supervisory arrangements ensure covered CCPs comply with legally binding requirements equivalent to EMIR, are subject to effective supervision and enforcement, and operate under a framework providing an effective equivalent system for CCP recognition.

The signing follows a parallel MoU between ESMA and the Reserve Bank of India announced on January 27, 2026, covering CCPs supervised by the RBI. That agreement allowed the Clearing Corporation of India Ltd (CCIL), a CCP supervised by RBI, to re-apply for recognition, and ESMA recognised CCIL as a Tier 1 third-country CCP on July 1, 2026, with effect from June 30, 2026. The recognition permits CCIL to provide clearing services to EU clearing members and trading venues, including banks and investment firms.

ESMA described the SEBI agreement as a further significant step towards restoring access for EU clearing members to Indian CCPs, following more than two years of sustained engagement with Indian authorities. The regulator said it is continuing discussions with the International Financial Services Centres Authority (IFSCA) with a view to concluding a similar cooperation arrangement.