ESMA-Indian regulators logjam: European banks' loss may aid US peers

Foreign investors may switch to custodians backed by American banks for India exposure

The derecognition of domestic clearing corporations by the European Securities and Markets Authority (ESMA) may come as a bonus for US-based banks providing custodial services for foreign portfolio investors (FPIs) to gain access to the Indian market. The move by the financial markets regulator of the European Union (EU) would mean Europe-based banks can no longer act as custodians in India come April 2023.

Banks — such as Société Générale, Deutsche Bank, and BNP Paribas — have a fairly large custodian business. If there is no agreement, their clients may switch to US-based banks, such as Citibank and BofA, said