NSE, SGX get regulator’s nod for joint F&O products at GIFT City

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Both bourses also working on discontinuing related arbitration proceedings

SGX, the Singapore bourse, and the NSE have buried the hatchet. Both the exchanges on Tuesday received approval from SEBI to operate jointly in Gujarat International Finance Tec (GIFT) City, the international finance city under the proposed programme ‘connect’. Simply put, Nifty index, which is trading on SGX in Singapore, will be traded on a joint platform between the NSE and the SGX in GIFT City.

“The Connect model, which is subject to further approvals from relevant local authorities, will enable SGX and NSE IFSC members to access Nifty products in GIFT while managing their exposures through their respective clearing corporations,” the NSE said.

The release meant that further approvals would still be required from regulators.

The fight between Nifty and SGX over trading had reached the courts some months ago. Nifty is India’s top traded derivative contract and it is widely traded on the SGX in the offshore market. The NSE had moved to de-list SGX Nifty after a scare that India’s trading volumes were moving to offshore market. But both the exchanges have now arrived at a middle path to trade Nifty in GIFT City jointly. GIFT is promoted like an offshore market where there are no taxes on trading by foreign funds.

The proposed NSE International Financial Service Centre (IFSC)-SGX Connect aims to bring together the trading of Nifty products in Gujarat GIFT City and create a larger pool of liquidity, comprising international and home market participants.

SGX and NSE will continue to work with all key stakeholders to make the NSE IFSC-SGX Connect operational before the end of 2020, subject to members’ readiness and receiving all relevant approvals. Both exchanges are also working to discontinue related arbitration proceedings, a release from NSE said.

Vikram Limaye, MD and CEO, NSE, said, “This is a great opportunity to build vibrant markets in GIFT City. We are working on varied product offerings to make GIFT City the hub for all-India access products across asset classes for international investors and a gateway for home investors to access international markets. Our partnership with SGX is an important step for GIFT City to realise the vision of our Honourable Prime Minister of India to be the pre-eminent financial centre serving the needs of home and international stakeholders.”

Loh Boon Chye, CEO, SGX, said, “As Asia’s most international and connected multi-asset exchange, we are committed to providing our global institutional clients with open, single-point access to Asia. Our comprehensive portfolio investment and risk management solutions across equities, fixed income, currencies and commodities, cover close to 100 per cent of Asia’s GDP. “India is an important market for international investors and we are committed to collaborating with the NSE and other stakeholders to build connectivity and access to one of the fastest-growing economies in the world.”