New Delhi, Feb. 24 -- In the regulatory tussle over supervision of India's clearing houses, the European Union blinked first.

Ending a three-year standoff over supervision of the Clearing Corp. of India Ltd (CCIL), the Reserve Bank of India (RBI) and the European Securities and Markets Authority (Esma) signed a memorandum of understanding on 27 January. While the two regulators did not release the details of the agreement signed alongside the conclusion of India-EU free trade talks, Esma has dropped its demand to supervise Clearing Corp. of India Ltd (CCIL), two people familiar with the development said.

In May 2023, Esma withdrew recognition of six Indian clearing houses, including CCIL, a move which threatened to raise costs for Europ...