MUMBAI (Reuters) – The central banks of India and England on Friday signed an agreement on information exchange for settlement of bond trades, the Reserve Bank of India (RBI) said.

In India, bonds are settled through the Clearing Corporation of India (CCIL).

Under the new agreement, the Bank of England (BoE) will assess and recognise CCIL as a counterparty to clear and settle bonds and overnight indexed swap trades done by England-based banks and investors.

The two central banks have also established a framework for the BoE to rely on the Indian central bank’s regulatory and supervisory activities, while safeguarding the United Kingdom’s financial stability, the RBI said.

In October last year, the European Securities and Markets Authority had withdrawn recognition of six Indian clearing counterparties, including CCIL, effective from April.

This meant that European banks had to settle their India-based trades through banks based in other jurisdictions.

Subsequently, CCIL also required a fresh application for BoE’s recognition.

The new agreement demonstrates the importance of cross-border cooperation to facilitate international clearing activities and the BoE’s commitment to deference to other regulators’ regimes, the RBI said.

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