NSE, SGX Get Regulatory Approval To Trade Through Gujarat Finance Hub
The two exchanges will try to operationalise the NSE IFSC-SGX Connect before the end of 2020.
The National Stock Exchange and its Singapore counterpart received regulatory approvals for a trading link through the international finance hub in Gujarat to help overseas investors hedge risks in one of Asia’s largest market.
India’s largest bourse and Singapore Exchange, earlier this year, had submitted a joint proposal to their respective regulators on an NSE-International Financial Services Centre-SGX Connect model that aims to bring together trading of Nifty products in the Gujarat International Finance Tec-City. This proposal has now received the regulatory dispensation, according to a media statement.
The connect model, subject to relevant local authorities’ approval, will enable SGX and NSE IFSC members to access Nifty products in GIFT City while managing their exposure through their respective clearing corporations.
The regulators in the two countries had intervened in July last year, urging the squabbling partners to find a solution after Indian exchanges stopped sharing pricing data with overseas peers to prevent volumes from shifting overseas. That came after SGX announced its plan to offer single-stock Nifty 50 futures, which contribute more than 85 percent of the futures turnover at the NSE.
SGX and NSE will continue to 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. Both exchanges are also working to discontinue related arbitration proceedings.NSE-SGX Joint Statement
“There is a significant amount of liquidity in Nifty contracts in Singapore. This is actually bringing back the markets that some would argue were exported over time,” Vikram Limaye, managing director and chief executive of NSE, said in the statement. “We wanted to make sure that we have a single liquidity pool in the dollar Nifty contracts as opposed to fragmented pools of our contracts in GIFT City and SGX contracts in Singapore. So now we’ll have one consolidated pool of liquidity for the NIfty futures dollar contract that will trade only in GIFT City.”
Limaye said they are working on varied product offerings to make GIFT City “the hub of activity for all India access products across asset classes for international investors and a gateway for home investors to access international markets”.
Watch Limaye’s press conference here: