The Singapore Stock Exchange said it will develop a new portfolio of India products for investors who trade in Nifty derivatives after its Indian peers decided to terminate pacts with foreign bourses to prevent volumes from moving offshore.
“We are committed to provide a commercially sustainable suite of solutions for our clients to manage their portfolio risks efficiently across markets and time-zones,” SGX said in a statement on its website. The details will be announced shortly.
Indian bourses will stop sharing data with overseas exchanges, the National Stock Exchange, the Bombay Stock Exchange and the Metropolitan Stock Exchange said in a joint statement on Feb. 9. That will halt derivatives tied to Nifty 50 Index and S&P BSE Sensex and stocks on Singapore and Dubai exchanges. The move came after SGX started offering single-stock futures that contribute a third of futures volumes on the NSE, India’s largest.
Foreign portfolio investors use such contracts to hedge their exposure in the cash segment, and moving to Singapore reduces costs as contracts are dollar-denominated and offer tax advantage.
SGX Eyes Partnership In GIFT City
SGX said it will maintain orderly trading and clearing of SGX India equity derivatives for clients. “Our licence agreement with the NSE will ensure the continuity of listing and trading our Nifty suite of derivative products till August 2018 at a minimum.”
Vikram Limaye, managing director and chief executive officer of NSE, had told BloombergQuint that the regulator and exchanges have taken a call to create an offshore jurisdiction in the International Financial Services Centre, Ahmedabad. Gujarat International Finance Tech City is an alternative for investors who trade in offshore jurisdictions for tax benefits, Limaye said.
SGX said it will work with the NSE to develop solutions at NSE's international exchange, NSE IFSC Ltd., in the GIFT City.