RBI Tightens Norms for Central Counterparties in India

The Reserve Bank of India has announced updated guidelines for entities seeking authorization as Central Counterparties (CCPs). These entities must have a net worth of Rs 300 crore and meet specific corporate structure criteria. The guidelines also cover foreign CCPs operating in India.

The Reserve Bank of India (RBI) has introduced stringent guidelines for entities aspiring to become Central Counterparties (CCPs). Effective immediately, such entities need to maintain a minimum net worth of Rs 300 crore at the time of application.

Central Counterparties, which act as intermediaries by becoming the buyer to every seller and the seller to every buyer, must submit an audited net worth certificate from the statutory auditor within six months after the financial year ends, as per the updated regulations unveiled on Monday.

The RBI mandates all authorized CCPs to be public companies limited by shares, with shares held by CCP users only. Additionally, foreign CCPs are required to obtain recognition from the RBI. Furthermore, a regulatory compliance committee led by an independent director must be established by the CCPs.

(With inputs from agencies.)