Explanation:

 x In general terms, clearing is an arrangement of trade which is done through the exchange of obligations. For the successful completion of trade clearing corporations is essential. Clearing Corporations are commonly called as a clearinghouse or clearing firm and it is a corporation which is associated with a stock exchange, which is established to handle confirmation, settlement and delivery of transactions. Clearing Corporations helps the stock exchanges and this stock exchanges, in turn, ensures that buying and selling of securities are being correctly dealt with. x Section 2(d) of the securities contract(regulation)(Stock exchange and clearing corporation) regulations, 2018 defines clearing corporation as “ entity that is established to undertake the activity of clearing and settlement of trades in securities or other instruments or products that are dealt with or traded on a recognized stock exchange and includes a clearinghouse. Hence statement 1 is correct. x The European Union (EU) market regulator, European Securities and Market Authority (ESMA), wants Indian regulators to sign an agreement that will give it the power to monitor, supervise or audit Indian clearing corporations. In November 2022, ESMA de-recognised six Indian CCs due to “no co-operation arrangements” between ESMA and the Indian regulators and set April 2023 deadline for the European banks to stop doing business with them.

The six CCs include Clearing Corporation of India (CCIL), supervised by RBI, Indian Clearing Corporation, NSE Clearing, MCX Clearing Corporation, supervised by SEBI, and India International Clearing Corporation and NSE IFSC Clearing Corporation, supervised by the IFSCA. Between these six CCs, trades in India’s entire cash and derivatives market in equities, bonds and forex are cleared and settled. Hence statement 2 is not correc