According to informed sources, Indian and European Union authorities are preparing to announce an agreement that will permit EU banks to process transactions through India's sovereign bond clearinghouse, thereby resolving a multi-year dispute that has impacted bond trading.

The sources indicated that the European Securities and Markets Authority (ESMA), the EU's financial market regulator, has agreed to recognize the Indian Clearing Corporation Ltd. (CCIL) as a legitimate clearing entity for EU banks.

They noted that EU banks will be able to smoothly conduct bond and derivatives transactions through CCIL, India's official government bond clearing institution.

The sources added that the anticipated resolution of this dispute is aided by progress made in the India-EU trade agreement negotiations.

Financial institutions affected by the dispute include Deutsche Bank AG, BNP Paribas, Société Generale, and Credit Agricole SA.

Emails and phone calls to ESMA outside of business hours, and an email to the Reserve Bank of India (RBI) seeking comment, did not receive immediate replies by the time of publication.