Singapore Exchange (SGX) and India’s largest bourse are formally ending their long-running dispute over trading of Indian derivatives in the city state, and will work on their plan to connect the exchanges with an international financial centre in the Indian state of Gujarat.
It marks the close of the clash triggered in 2018 when SGX moved to develop products based on India’s Nifty stock market index after two Indian bourses, including Mumbai-based National Stock Exchange (NSE), announced they would stop providing data feeds to foreign exchanges to halt the drain of liquidity from India.
NSE obtained an interim injunction against SGX from the Bombay High Court, which ordered them into arbitration. The arbitrator asked SGX to continue listing and trading Nifty contracts past the deadline set by NSE, and barred it from offering the planned new products until a final decision was made.
Just over a year ago, SGX and NSE first announced their plan to develop a channel to connect the bourses with the International Financial Services Centre (IFSC) and the Gujarat International Finance Tech City or GIFT City that forms part of the centre.
They have now agreed to end arbitration proceedings and have signed a formal agreement to “cement the key terms for operationalising the NSE IFSC-SGX Connect”, the Singapore bourse says in a statement on September 22.
According to SGX, the channel will bring together both global and IFSC investors “to create a bigger liquidity pool for Nifty products in GIFT City”. The bourses will continue to work with key stakeholders to develop the infrastructure and ensure member readiness before it’s launched. No timeline is provided.
SGX Chief Executive Officer Loh Boon Chye says building connectivity across international platforms in Singapore and India will facilitate unfettered access to Nifty derivatives products for global investors.
“This, in turn, enhance investments and capital market flows between India and the world,” he says in the statement. “As Asia’s pioneering central counterparty, SGX will work with NSE and stakeholders to develop a connectivity infrastructure that incorporates international best practices and creates new value for existing and new customers.”
Vikram Limaye, managing director and chief executive officer of NSE, adds that the move is “one of the key developments for the integration of GIFT City ecosystem with the international financial markets”, and will help develop “vibrant and liquid” markets for Indian investment products.