SGX resumes tie-up talks with India's largest bourse

The Singapore Exchange's relations with the National Stock Exchange of India had appeared to sour further after NSE filed an interim injunction, succeeding in barring SGX from launching the new India derivatives products.
The Singapore Exchange's relations with the National Stock Exchange of India had appeared to sour further after NSE filed an interim injunction, succeeding in barring SGX from launching the new India derivatives products.PHOTO: REUTERS

Move comes amid arbitration proceedings over their derivatives products listing dispute

The Singapore Exchange (SGX) has resumed talks with India's largest bourse, the National Stock Exchange of India (NSE), on a potential collaboration in India's fledgling finance hub, the Gujarat International Finance Tec-City International Financial Services Centre (GIFT IFSC).

This comes while the two exchanges are engaged in arbitration proceedings over the planned listing of new India derivatives products, which SGX had planned to roll out in June.

Revenue from the new products was to compensate for the loss to SGX of its Nifty 50 futures products after India pulled the plug on the licensing agreement in February this year.

Relations had appeared to sour further after NSE filed an interim injunction on May 21, succeeding at the Bombay High Court in barring SGX from launching the new India derivatives products.

The court ordered the matter to go into arbitration.

SGX said yesterday the arbitrator had granted a deferment of the arbitration proceedings between SGX and NSE's index company IISL.

"SGX and NSE will jointly engage and consult relevant stakeholders on the proposed collaboration," said the Singapore bourse, adding that the directions under the arbitration order remain effective.

The latest announcement follows a discussion by the regulators of both countries on Monday of various issues including the "amicable resolution" of the NSE and SGX issue, said the Monetary Authority of Singapore and the Securities and Exchange Board of India in a joint statement.

The regulators agreed to further strengthen their collaboration to benefit their capital markets while also agreeing that NSE and SGX "would carry out necessary discussions to come up with a solution that is acceptable to both the parties".

The dispute between the two exchanges came in February this year after NSE pulled the plug on offshore derivatives trading linked to Indian indices by scrapping the data feed and licensing agreements with foreign exchanges.

One of the hardest hit was the SGX, which counts the Nifty 50 futures products as one of its most popular offerings.

India cited volumes in derivatives trading reaching "large proportions" in foreign jurisdictions, which have led to the migration of liquidity from India, as a reason for the decision.

The uncertainty over the impact on earnings and the subsequent chain of events in this dispute took a toll on SGX's stock - trading at a high of $8.50 in January this year and dropping to a low of $7.05 in early July - with some analysts describing the sell-down as "overdone".

A version of this article appeared in the print edition of The Straits Times on July 26, 2018, with the headline 'SGX resumes tie-up talks with India's largest bourse'. Print Edition | Subscribe