European Securities & Markets Authority (ESMA) has certified NSE's clearing arm NSCCL as a qualified central counterparty (CCP), a move which will lower the capital requirements for European participants in the domestic markets.
A qualified CCP member is subjected to lower capital requirements/charges under the Basel III framework introduced by the Basel Committee on Banking Supervision.
"The National Securities Clearing Corporation Ltd (NSCCL) has been granted recognition by European Securities & Markets Authority as a 'third-country CCP' under Chapter 4 of the title III of the European Market Infrastructure Regulation (EMIR)," NSE said in a statement here.
"The recognition to NSCCL as a 'third-country CCP' is with effect from September 27, 2017," it added.
According to NSE, European participants shall be able to apply a significantly lower risk weighting from present 2 per cent towards their trade exposures to the domestic markets.
"This recognition of NSCCL would enable European based banks to continue to participate in the Indian Capital markets and is a step in reinforcing that the legal and supervisory arrangements in India under regulator Sebi provide for an effective equivalent system for recognition of third country CCPs under EMIR," NSE said.
"This development should give increased confidence in the Indian capital markets and encourage increased participation from European based market intermediaries and asset managers," it added.
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