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Singapore, India exchanges to launch new Nifty futures trading model by end-2020

By Asia Asset Management  
Aug 8, 2019

Singapore Exchange (SGX) and a major bourse in India have struck a deal to end their 18-month row over the trading of Indian derivatives contracts on the SGX.

SGX and the National Stock Exchange of India (NSE) will create a new trading model in which Nifty futures contracts traded on the Singapore bourse will be executed at the International Financial Services Centre (IFSC) in GIFT City, in the Indian state of Gujarat, by the end of 2020.

According to a joint statement from the two exchanges, the new model, called NSE IFSC-SGX Connect, will allow their members to access Nifty products in GIFT City while managing their exposure through their respective clearing corporations.

The exchanges will "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", the August 6 statement says, adding that they will also move to discontinue court-ordered arbitration over their conflict.

Their clash began in February 2018 when NSE and two other Indian exchanges announced they would stop providing data feeds to foreign bourses in six months, saying it was to stop liquidity from leaving India.

SGX had then planned to introduce its own version of Nifty products, but NSE filed legal action in the Bombay high court in June 2018 and obtained an interim injunction against the launch. The court also ordered SGX and NSE into arbitration.

The arbitrator subsequently asked SGX to continue listing and trading Nifty contracts past the August 2018 deadline set by NSE, and barred it from offering the planned new products until a final decision was made.

SGX Chief Executive Officer Loh Boon Chye says India is an important market for international investors, and the exchange is "committed to collaborating with NSE and other stakeholders to build connectivity and access to one of the fastest growing economies in the world".

"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," Mr. Loh says in the statement.

Vikram Limaye, managing director and chief executive officer of NSE, adds that the partnership between the two exchanges is a “great opportunity to build vibrant markets in GIFT City” and an important step for it to become “the preeminent financial centre serving the needs of home and international stakeholders”.

GIFT is acronym for Gujarat International Finance Tech City, India's first operational smart city and international financial services centre. Financial companies that set up operations at GIFT City are entitled to various tax waivers.