SEBI Signs Regulatory Cooperation Pact With Bank of England on Clearing Corporations — October 28, 2026

In a major step toward safeguarding cross-border financial stability and institutional trade flows, the Securities and Exchange Board of India (SEBI) and the Bank of England (BoE) have entered into a Memorandum of Understanding (MoU) regarding the oversight of SEBI-recognised clearing corporations.

The agreement establishes a formal mechanism for regulatory cooperation, consultation, and information sharing between the two authorities regarding Central Counterparties (CCPs) in line with their respective legal and regulatory frameworks. Crucially, the framework enables the Bank of England to place reliance on SEBI's domestic supervisory and regulatory activities while ensuring financial stability within the United Kingdom.

Key Pillars of the Bilateral Framework

The pact addresses cross-border operational requirements under the UK European Market Infrastructure Regulation (UK EMIR), which governs third-country CCP recognition.

• Regulatory Deference: The arrangement recognizes SEBI's primary supervisory jurisdiction over domestic clearing corporations, avoiding extraterritorial regulatory overreach while satisfying UK equivalence conditions.
• Information Exchange: The two regulators will share relevant data, audit reports, and risk assessments to manage cross-border counterparty risks effectively.
• Preserving Cross-Border Trade: The framework ensures that London-headquartered investment banks and institutional funds can clear trades in India without facing regulatory non-compliance back home.

Significance for Indian Capital Markets

The regulatory clarity brings relief to foreign portfolio investors (FPIs), custody banks, and global brokerages operating in Mumbai. The UK represents one of the largest sources of foreign portfolio capital flowing into Dalal Street. SEBI-recognised clearing houses—such as NSE Clearing Limited (NCL), BSE's Indian Clearing Corporation Limited (ICCL), and Multi Commodity Exchange Clearing Corporation (MCXCCL)—guarantee trade settlements across equity, commodity, and currency derivatives.

Without bilateral recognition agreements, UK lenders and institutional funds would have faced punitive capital charges or operational bans on clearing transactions through Indian entities. The pact mirrors a similar precedent established in December 2023, when the Reserve Bank of India (RBI) and the Bank of England signed an MoU covering the Clearing Corporation of India Limited (CCIL) for government bond and forex clearing.

By successfully institutionalizing reliance on Indian market regulators, SEBI's agreement prevents market fragmentation, protects foreign capital inflows, and reinforces India's position as an attractive destination for global investment.