SGX Feud
As of Monday, a cross-border trading link between the leading bourses of the two Asian nations will be completely operational. As a result, derivative contracts with a notional value of roughly $7.5 billion that were previously traded in Singapore will move to India.
With effect from Monday, SGX Nifty, the futures contract traded by Singapore Exchange Ltd. on India’s major equity NSE Nifty 50 Index, will trade under the name GIFT Nifty. Trading started at 6:30 a.m. local time. All outstanding orders will be moved to the GIFT City, a brand-new financial centre in the Gujarat state of western India.
The switch from SGX to the NSE International Exchange at GIFT or Gujarat International Finance Tech-City also highlights partial success of the Prime Minister Narendra Modi-led administration’s attempts to attract India-centric trading that had moved to global financial centers such as Dubai, Mauritius and Singapore to its shores.
“We are expecting the liquidity pool to grow as all orders from Singapore will be routed into our platform while local brokers from IFSC can also trade,” said V. Balasubramaniam, chief executive officer of NSE IX Ltd., a unit of National Stock Exchange of India Ltd. “Contracts having open interest of about $7.5 billion are getting switched.”
The move fully settles a five-year old feud between National Stock Exchange of India Ltd. and Singapore Exchange over the latter’s plan to introduce single-stock futures trading on shares of some of India’s largest companies as India sought to develop its equity market. The dispute was resolved amicably after briefly entering a legal battle.
Nifty derivative contracts were the second-biggest contributors to SGX’s equity-derivative volumes after SGX FTSE China A50 Index futures in the fiscal year 2022, and helped expand the bourse’s revenue from higher average fees and volumes.
According to Michael Syn, head of equities at SGX, SGX and Nifty will split expenses and profits “roughly 50-50.” According to him, the clearing will be handled by SGX, and the trading of futures and options will take place at GIFT City.
For the trading link, which has been in construction for more than two years, “detailing the necessary infrastructure” was the biggest operational challenge, according to Syn. “It’s operating procedures, regulations, statutes, clarity, and all of those things.”
According to a statement released by NSE earlier this month, investors can initially access derivative products like GIFT Nifty 50 and GIFT Nifty Bank, and subsequently other indexes will be introduced.
(This story has not been edited by Bharat Express staff and is auto-generated from a syndicated feed.)
