France’s markets watchdog has extended by 18 months the time French banks have to transfer trading positions from Indian clearing houses, amid a dispute between regulators regarding oversight of securities settlement.
The standoff stems from changes in European Union financial regulation that require agreements between EU regulators and other countries that have their own central clearing houses for market transactions. After the Reserve Bank of India resisted a request by the European Securities and Markets Authority to be allowed to join the RBI in overseeing Indian transactions, ESMA said in October it would withdraw recognition of six Indian central counterparties, with the application effective April 30.
The French regulator Autorité des Marchés Financiers said in a statement Friday that it had received strong concerns from some domestic financial institutions about the length of time to terminate membership toward Indian central clearing counterparties and to orderly transfer their positions. As a result, AMF said those institutions could submit transitional plans to transfer positions no later than Oct. 31, 2024.
The broader clash may mean that European financial institutions ultimately have to unwind billions of rupees of transactions or set aside higher capital to trade in India, though they may still be able to use Indian clearing houses through local subsidiaries or banks.
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