The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval to the Securities and Exchange Board of India (SEBI) for entering into a Memorandum of Understanding (MoU) with European Securities and Markets Authority (ESMA) in relation to Mutual Co-operation.

The MoU is likely to establish cooperation arrangements as a precondition for ESMA to recognize Central Counter Parties (CCPs) established in India and supervised by the Securities and Exchange Board of India to provide clearing services to clearing members or trading venues established in the European Union and to provide ESMA with adequate tools to monitor the on-going compliance by the Covered CCPs with the Recognition Conditions.

Central counterparty recognition enables cross-border clearing under an MoU, establishing cooperation and compliance monitoring mechanisms. An MoU between SEBI and ESMA establishes cooperative arrangements and information sharing mechanisms to enable ESMA to recognise CCPs established in India and supervised by SEBI, permitting those CCPs to provide clearing services into the EU, and to give ESMA tools to monitor ongoing compliance with the Recognition Conditions.