European Securities and Markets Authority recognizes MCCIL as third CCP

by Shrutee K/DNS

Mumbai  MCCIL, a subsidiary of Metropolitan Stock Exchange of India Limited (MSE), a qualified Central Counter Party (QCCP) and clearing corporation recognised by SEBI, announced it won a key recognition from ESMA that will allow it to provide central counter party services to market participants of European origin. ESMA, after convincing itself that MCCIL’s application met with all conditions for recognition as a CCP under EMIR, formally recognised it as a “third-country CCP” under European Market Infrastructure Regulation (EMIR) effective September 27, 2017. ESMA is an independent European Union Authority safeguarding the stability of European Union's financial system. A CCP established in a third country (non-EU) may provide clearing services to members/trading venues established in the EU only after ESMA recognition.

Commenting on the recognition, Udai Kumar, MD & CEO, MSE, said, “We are extremely delighted by this recognition which places us at par with the other 2 older market players and paves way for us to deliver central counterparty services to market participants of European Origin. Also, this combined with the QCCP status of MCCIL means lower risk capital provisioning for market participants of European Origin. Balu Nair, MD, MCCIL added, “MCCIL is the only Clearing Corporation in India which has reported no delays or defaults in settlement since inception. MCCIL’s robust IT infrastructure which allows optimal adherence to risk management practices & transparency, was a key driver for this recognition”.

In December 2016, the European Commission had determined that India has the equivalent regulatory regimes for central counterparties (CCPs) to the European Union. In June 2017, the Union Cabinet gave an approval to Securities and Exchange Board of India (SEBI) for entering into a MoU for mutual co-operation with ESMA. Subsequently, SEBI entered into a MoU with the ESMA which establishes cooperation arrangements, including the exchange of information relating to Central Counterparties (CCPs) which are established and authorised or recognised in India by SEBI, and which have applied for EU recognition under EMIR.

MCCIL provides clearing, settlement, collateral and risk management services for all trading segments of MSE. Presently, MCCIL has around 100 clearing members out of which more than 20 are banks. Some of the banks that are clearing members of MCCIL are registered in the European Union and are operating in India as foreign bank branches.

Aout MSE: MSE is the youngest national level stock exchange in India with operations in Currency Derivatives, Equity Cash & Derivatives and Debt segment. It has 93% stake in the subsidiary MCCIL. The exchange is working on a business revival strategy and further capitalisation of its subsidiary.Its shareholders include India’s top public and private sector banks and domestic financial institutions who together hold over 34%, besides eminent shareholders like Rakesh Jhunjhunwala, Radhakishan Damani and Nemish S. Shah. MSE boasts of a Board of Directors with eminent personalities and a professional management to steering the company to its growth potential. In line with global best practices and regulatory requirements, clearing & settlement of trade on the exchange are through its subsidiary Metropolitan Clearing Corporation of India Ltd. (MCCIL), an accredited Qualified Central Counterparty.