India's biggest stock exchange has gone to court to stonewall the plan by the Singapore Exchange (SGX) to roll out three new India equity derivative products on June 4, deepening the rift between the two bourses, which have been jostling to protect their respective turfs since February.
The National Stock Exchange of India (NSE) notified SGX of its application to the Bombay High Court for an interim injunction on the three products - SGX India Futures, SGX Options on SGX India Futures and SGX India Bank Futures.
The SGX is, however, standing its ground on its June 4 launch of the products, which are an alternative to its flagship Nifty 50 contracts to be delisted in August.
The delisting follows NSE's shock move in February to scrap an 18-year agreement because it wants to end offshore trading of derivatives tied to its benchmark indices.
The SGX said in a statement: "Our new India derivative products, which have received the relevant regulatory approvals, will list in June 2018 and allow our clients to seamlessly transition their India risk-management exposures."
The new products are designed to cushion the blow from NSE's decision to end the long-term pact and replace SGX's highly popular Nifty 50 contracts.
SGX's head of derivatives Michael Syn said in the statement: "SGX has a responsibility to provide risk management tools for its global clients and ensure that there is no disruption to the marketplace."
He added that SGX remains open to working with NSE and other relevant stakeholders to develop a solution.
Unlike its Nifty family of products, SGX's new products are not tied to the Nifty licence agreement with the NSE, which was terminated by the Indian exchange to prevent trading volumes from leaking overseas, with the hope of drawing capital onshore to its primary markets instead.
The latest move may be another setback for the SGX, which has also been in talks with the Indian bourse to sweeten the Gujarat International Finance Tec-City proposition to global institutional investors.
SGX closed 16 cents, or 2.09 per cent, down at $7.48 yesterday after it called for a trading halt for just over an hour in early trade pending the announcement.
The impact of the Mumbai court's decision - which could come in as early as today - on SGX is unclear.
One market observer questioned its enforceability, given that it involves a different jurisdiction, in this instance, Singapore.
"India's intention may be to create some noise and confusion over the new products. This move has no leg as it involves different jurisdictions," said the observer.
For its part, the SGX said it has received the relevant regulatory approvals to push ahead with its new products. These include the nod from the US Commodity Futures Trading Commission (CFTC) - this allows SGX to offer the new products to US investors - as well as the Monetary Authority of Singapore.
The NSE has been trying to play catch-up with the SGX since the former embarked on a conscious mission to draw foreign capital onshore in the derivatives space.
Last week, NSE said it snagged an exemption order from the US CFTC that allows NSE members to trade in derivatives for US clients.
