They said Deutsche Bank, BNP Paribas, Credit Agricole and Societe Generale are likely to make requests to German and French financial authorities to grant an extension of an October 2024 deadline by at least six months to transact with the Clearing Corporation of India (CCIL).
“The requests will likely go to the BaFIN (the German federal financial supervisory authority) and the AMF (Autorite des marches financiers of France). Pending a resolution of the issue with the European Securities and Markets Authority (ESMA), the banks here will definitely need at least six months if other alternatives like third-party clearing are to be implemented,” said one of the persons, who did not wish to be identified. “Ideally, a fresh two-year extension would provide breathing room for the banks in question because many processes need to be set up and completed for alternative trading methods to work.”
BNP Paribas declined to comment on the matter, while ET’s queries emailed to the other three banks did not elicit a response by press time.
In October 2022, the ESMA derecognised six Indian clearing houses, including the CCIL, with effect from May 2023. The move came after the Reserve Bank of India (RBI) refused the European body rights of audit and inspection over the CCIL.
Subsequently, the national regulators in France and Germany provided additional time of 18 months till October 2024 for banks from their countries to comply with the ESMA’s derecognition of the CCIL. However, the ESMA said that a structure of higher capital requirements would be applicable to European banks’ transactions with the CCIL.The CCIL, which hosts the trading platform for Indian government bonds and interest rate derivatives such as overnight indexed swaps, is supervised by the RBI.