Sebi signs MoU with Bank of England to strengthen oversight of clearing corporations

SEBI and the Bank of England deepen regulatory ties through an MoU focused on clearing corporations, information sharing, cross-border oversight and financial stability.

The agreement establishes a framework for cooperation between the two regulators on central counterparties (CCPs), in accordance with their respective laws and regulatory frameworks, according to SEBI’s latest circular.

Under the MoU, the Bank of England can place reliance on SEBI’s regulatory and supervisory activities while safeguarding the UK’s financial stability. The arrangement is aimed at facilitating cooperation between the two authorities in matters concerning clearing corporations, while ensuring that their respective regulatory responsibilities remain aligned with applicable laws and regulations.

“The MoU enables SEBI and BoE to cooperate regarding Central Counterparties, in line with their respective laws and regulations, and establishes a framework for BoE to place reliance on SEBI’s regulatory and supervisory activities while safeguarding the UK’s financial stability,” SEBI said in its circular.

The agreement highlights the importance of cross-border regulatory cooperation in supporting international clearing activities. As financial markets become increasingly interconnected, coordination between regulators across jurisdictions plays an important role in facilitating the functioning of market infrastructure and strengthening supervisory arrangements.

Clearing corporations are a key component of the financial market ecosystem. They act as intermediaries between buyers and sellers, helping manage counterparty risk and ensuring the orderly settlement of trades. Their effective regulation and supervision are therefore important for maintaining confidence in financial markets and managing risks associated with clearing activities.

The exchange of information and cooperation between SEBI and the Bank of England could help facilitate regulatory oversight of clearing-related activities that have a cross-border dimension. The framework also provides a basis for the UK regulator to rely on SEBI’s existing regulatory and supervisory processes, subject to the terms of the MoU and the applicable legal requirements.

The MoU marks a step towards closer coordination between Indian and UK authorities on the supervision of clearing-related activities. It also reflects the broader significance of cooperation between financial regulators in supporting international market operations while safeguarding financial stability.

Disclosure: This article has been written by Kumar Gaurav, who is not a Sebi-registered Research Analyst or an Investment Adviser. Gaurav and their ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective Sebi-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here