The Securities and Exchange Board of India (SEBI) signed a Memorandum of Understanding with the Bank of England on 28 October 2026 in Mumbai on SEBI recognised clearing corporations. The pact creates a framework for sharing information on central counterparties. It lets the Bank of England rely on SEBI supervision while safeguarding UK financial stability.
What Is SEBI and How Does It Work?
The Securities and Exchange Board of India (SEBI) is the regulator for the securities and commodity derivatives market in India. SEBI in the stock market sets rules for stock exchanges, brokers, mutual funds, foreign investors and market infrastructure, and it acts to protect investors and keep trading fair and orderly.
SEBI was first set up as a non statutory body on 12 April 1988 through a government resolution. It became a statutory body on 30 January 1992 when the SEBI Act, 1992 came into force. Before SEBI, the Controller of Capital Issues regulated the market under the Capital Issues (Control) Act, 1947. Parliament created SEBI to give the market a full time, independent regulator with legal powers for inspection, investigation and enforcement.
SEBI works under the administrative domain of the Ministry of Finance. It is headquartered at SEBI Bhavan, Bandra Kurla Complex, Mumbai, with regional offices in New Delhi, Kolkata, Chennai and Ahmedabad. The Chairperson is Tuhin Kanta Pandey, who took charge on 1 March 2025. Its board includes whole time members, nominees from the Finance Ministry and the Reserve Bank of India (RBI), and part time members appointed by the central government.
| SEBI Fact | Detail |
|---|---|
| Full form | Securities and Exchange Board of India |
| Set up | 12 April 1988 as non statutory body |
| Statutory status | 30 January 1992 under SEBI Act, 1992 |
| Headquarters | Bandra Kurla Complex, Mumbai |
| Current Chairperson | Tuhin Kanta Pandey (from 1 March 2025) |
SEBI frames rules known as SEBI regulations, issues directions to exchanges and intermediaries, and supervises market infrastructure institutions. Clearing corporations are regulated under the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018. In practice, SEBI registers market entities, approves products, monitors trading and settlement, checks disclosures by listed companies, and takes action against fraud and insider trading.
What Is a Clearing Corporation in the Stock Market?
A clearing corporation is a specialised institution that clears and settles trades done on a stock exchange. It works as a Central Counterparty (CCP). After a trade is executed, the CCP becomes the buyer to every seller and the seller to every buyer. This step removes the direct risk between the two traders. If one side fails to pay or deliver, the CCP still completes settlement as per its rules.
The Clearing Corporation of India Ltd (CCIL) handles government securities, foreign exchange and money market clearing under RBI oversight. It is different from the clearing corporations discussed here, which handle securities market trades under SEBI oversight.
SEBI recognised clearing corporations perform margin collection, risk management, netting of obligations, and final delivery of funds and securities through depositories. They hold a settlement guarantee fund to absorb a member default. They follow the Principles for Financial Market Infrastructures (PFMIs), global standards issued by the Committee on Payment and Settlement Systems and the International Organization of Securities Commissions (IOSCO). SEBI, as a member of IOSCO and the Financial Stability Board, applies these standards in India.
| SEBI Recognised Clearing Corporation | Serves Mainly |
|---|---|
| NSE Clearing Ltd | Trades on National Stock Exchange |
| BSE Clearing Ltd (earlier Indian Clearing Corporation Ltd) | Trades on BSE, mutual funds and corporate debt |
| Multi Commodity Exchange Clearing Corporation Ltd | Commodity derivatives trades |
| National Commodity Clearing Ltd | Commodity derivatives trades |
| AMC Repo Clearing Ltd | Repo trades in corporate debt |
These bodies are classified as Market Infrastructure Institutions with stock exchanges and depositories. SEBI requires at least 51 percent of the paid up equity of a clearing corporation to be held by one or more recognised stock exchanges. This structure keeps ownership and supervision aligned with market stability.
What Does the SEBI Bank of England MoU Provide?
SEBI announced the pact in press release PR No. 66/2026 dated 28 October 2026 in Mumbai. The Bank of England is the central bank of the United Kingdom. It was founded in 1694 under a Royal Charter, operates from Threadneedle Street in London, and maintains monetary and financial stability for the UK. The Governor is Andrew Bailey. The Bank supervises banks, insurers and financial market infrastructure, including clearing houses, through its Prudential Regulation Authority and Financial Policy Committee.
Under the MoU, SEBI and the Bank of England will cooperate on Central Counterparties in line with their own laws and regulations. The MoU sets three clear outcomes.
- SEBI and the Bank of England will share supervisory information on SEBI recognised clearing corporations.
- The Bank of England can place reliance on SEBI regulatory and supervisory work instead of duplicating inspections.
- Cooperation will protect UK financial stability while supporting safe international clearing.
The agreement does not transfer SEBI powers to London or change Indian law. Each authority keeps its own legal mandate. The Bank of England will use SEBI information within the limits of applicable law and for supervisory purposes. SEBI said the MoU shows the value of cross border cooperation to support international clearing activity as markets grow more connected.
Why Cross Border Clearing Needs Regulatory Cooperation
Clearing links domestic markets to global finance. UK banks, funds and clearing members may clear rupee assets, equities or derivatives through Indian clearing corporations. UK regulators must be sure those foreign clearing houses are safe. Indian regulators must keep full control over local entities. A cooperation MoU bridges this gap.
The MoU follows the deference model used in global regulation. Deference means one regulator accepts the quality of another regulator home supervision after due checks. It reduces duplicate audits and lowers costs for clearing members. It also speeds up decisions on recognition of third country CCPs, a formal status that allows foreign banks to use them with lower capital charges.
| Aspect | SEBI Supervised CCPs | RBI Supervised CCP |
|---|---|---|
| Example | NSE Clearing, BSE Clearing, MCX Clearing | Clearing Corporation of India Ltd |
| Main market | Equities, equity derivatives, commodity derivatives, corporate debt repo | Government securities, forex, money market |
| Foreign recognition route | SEBI to Bank of England MoU of October 2026, SEBI to European Securities and Markets Authority (ESMA) MoU of 4 September 2026 | RBI to Bank of England MoU of 1 December 2023 |
The new pact builds on recent steps. On 4 September 2026, SEBI signed a similar MoU with ESMA to help Indian CCPs seek recognition under the European Market Infrastructure Regulation. That pact replaced a 2017 agreement and updated the framework after changes to European law. On 1 December 2023, the RBI signed an MoU with the Bank of England on the Clearing Corporation of India Ltd to help the Bank assess its application as a third country CCP. The October 2026 SEBI pact extends the same logic to the securities market segment and completes coverage for Indian clearing infrastructure used by UK firms.
How the MoU Fits Into the India UK Financial Partnership
The SEBI Bank of England pact sits inside a wider finance dialogue between the two countries. The fourth India UK Financial Markets Dialogue took place on 29 September 2026 in London. It was led by senior officials of the Indian Ministry of Finance and HM Treasury of the UK. Regulators on both sides joined, including SEBI, the RBI, the International Financial Services Centres Authority (IFSCA), the Pension Fund Regulatory and Development Authority (PFRDA), the Insurance Regulatory and Development Authority of India (IRDAI), the Bank of England and the Financial Conduct Authority (FCA).
The dialogue reviewed capital markets, insurance and pensions, asset management and financial technology. Both sides backed open and resilient markets, more cross border investment, and Indian firms access to global capital through routes such as GIFT IFSC. They also noted the role of the India UK Financial Partnership, an industry led body that gives policy inputs on fintech, green finance and asset management.
Two policy markers add context. Both sides referred to Vision 2035, the shared roadmap for the bilateral relationship, and to the Comprehensive Economic and Trade Agreement, which entered into force on 15 July 2026. The next review will take place through bilateral mechanisms and at the next India UK Economic and Financial Dialogue. For the securities market, closer clearing supervision lowers friction for cross listings, bond activity including rupee denominated Masala Bonds in London, and participation by UK asset managers in Indian markets.
Key Takeaways
- The SEBI Bank of England MoU was signed on 28 October 2026 in Mumbai on cooperation for SEBI recognised clearing corporations.
- The MoU lets the Bank of England rely on SEBI supervision of central counterparties while safeguarding UK financial stability.
- SEBI was set up on 12 April 1988 and became a statutory body on 30 January 1992 under the SEBI Act, 1992, with headquarters in Mumbai.
- The Bank of England was founded in 1694 and is based at Threadneedle Street, London as the central bank of the United Kingdom.
- The pact follows the SEBI ESMA MoU of 4 September 2026 and the fourth India UK Financial Markets Dialogue held on 29 September 2026 in London.
