RBI grants counter party status to Clearing Corporation

The Reserve Bank of India (RBI) has granted the status of a qualified central counterparty (QCCP) to Clearing Corporation of India Ltd (CCIL) in the Indian jurisdiction.

CCIL qualifies as a QCCP in view of the fact that it is authorised and supervised by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007.

CCIL is also subjected, on an on-going basis, to rules and regulations that are consistent with the Principles for Financial Market Infrastructures (PFMIs) issued by the Committee on Payment and Settlement Systems (CPSS) and International Organisation of Securities Commissions (IOSCO), RBI said in a release on Wednesday.

It may be noted that CCIL is authorised to operate payment systems for the securities segment covering government securities; collateralised borrowing and lending obligations (CBLO); forex settlement segment comprising sub-segments such as USD-INR segment, continuous linked settlement segment (settlement of cross currency deals), forex forward segment; rupee derivatives segment that include rupee denominated trades in interest rate swaps (IRS) and forward rate agreements (FRA) under section 7 of the Payment and Settlement Systems Act, 2007.

In July 2013, CCIL was designated as a critical Financial Market Infrastructure (FMI) for oversight considering its systemic importance in financial markets regulated by the RBI. As such, it was subjected to regulation and supervision using the PFMI framework thus necessitating its adherence to PFMI requirements. The PFMIs were issued by the CPSS and the IOSCO in April 2012.

These were issued to enhance safety and efficiency in payment, clearing, settlement, and recording arrangements, and more broadly, to limit systemic risk and foster transparency and financial stability. The RBI, like all members of CPSS and IOSCO is required to strive to adopt the PFMIs in is jurisdiction in line with the G20 expectations.