A $10 billion derivative trade shifts to India as feud with SGX ends
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SGX Nifty will be known as Gift Nifty from July 3.
PHOTO: REUTERS
Mumbai – Derivative contracts with a notional value of about US$7.5 billion (S$10 billion) traded in Singapore will shift to India as a cross-border trading link between the two Asian countries’ top bourses becomes fully operational on Monday.
SGX Nifty, the Singapore Exchange-traded futures contract on India’s key equity NSE Nifty 50 Index, will be known as Gift Nifty from Monday, and all outstanding orders will be transferred to Gift City, the new financial hub in the western Indian state of Gujarat.
The switch from the Singapore Exchange (SGX) to the National Stock Exchange of India’s (NSE) International Exchange at Gift City – or the Gujarat International Finance Tech-City – also highlights the partial success of Prime Minister Narendra Modi’s administration’s attempts to attract India-centric trading from global financial centres such as Dubai, Mauritius and Singapore to India.
“We are expecting the liquidity pool to grow as all orders from Singapore will be routed into our platform while local brokers from IFSC (international financial services centre) can also trade,” said Mr V. Balasubramaniam, chief executive of NSE IX, a unit of the NSE. “Contracts having open interest of about US$7.5 billion are getting switched.”
The move fully settles a five-year old feud between the NSE and SGX 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 the parties briefly entered 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 fiscal year 2022, and helped expand the bourse’s revenue from higher average fees and volumes.
SGX and Nifty will be splitting costs and revenues “roughly 50-50”, SGX head of equities Michael Syn said in an interview. The trading of futures and options will happen in Gift City while SGX will do the clearing, he added.
To begin with, investors can access derivative products, including Gift Nifty 50 and Gift Nifty Bank, and gradually other indexes will be introduced, NSE said in a statement in June. BLOOMBERG
