Combine 1 1/2 cups water, salt, and onions in a bowl. Cover mixture and refrigerate overnight.
Combine 1/2 cup water, sherry vinegar, malt vinegar, cream sherry, brown sugar, mustard seeds, fennel seeds, peppercorns, and red chile in a nonaluminum saucepan, and bring mixture to a boil, stirring to dissolve sugar. Reduce heat, and simmer 5 minutes. Remove mixture from heat, and let stand 1 hour.
Drain onions. Rinse onions and pat them dry. Add onions to the vinegar mixture, and bring to a boil.
Reduce heat, and simmer mixture for 3 minutes. Place onions, bay leaves, and rosemary in hot jars; cover onion mixture with hot vinegar mixture, leaving 1/4-inch head space.
Cover jars with metal lids, and screw on the bands. Cool completely. Refrigerate onions at least 1 month before serving.