SGX Tells Clients It Can Offer Nifty Options For 18 Months
Singapore exchange says NSE has to support contracts issued within six-month notice period for another one year.
Foreign investors can continue trading in Nifty options contracts on the Singapore Stock Exchange for 18 months after its Indian peer terminated the data-sharing pact.
That’s what SGX told to its clients, a person aware of the communication told BloombergQuint requesting anonymity. The exchange offers Nifty 50 futures and options and MSCI India futures. The agreement allows it to offer products for a minimum of six months after termination, and the NSE will support SGX with the settlement price for another 12 months, the person said.
SGX was allaying concerns after the NSE and its domestic peers—the Bombay Stock Exchange and Metropolitan Stock Exchange—decided to stop sharing data with overseas bourses to prevent volumes from shifting offshore. The immediate trigger was SGX’s decision to start Nifty single-stock futures that contribute a third of futures volumes on India’s largest exchange.
NSE and SGX didn’t respond to BloombergQuint’s emailed queries seeking clarity.
After NSE terminated its licensing arrangement, its managing director and chief executive officer Vikram Limaye had told BloombergQuint that their pact requires the bourse to give a six-month notice.
It also requires the NSE to support all contracts that have been issued by the Singapore exchange till the last day of six months’ notice, said a second person aware of the pact requesting anonymity. Which means, SGX can issue three-month futures till August that will be settled in October.
SGX can also issue two nearest serial months options contracts and four quarterly options contracts in Nifty in March, June, September and December, according to its website. It has already issued contracts for March 2019, Bloomberg data show. It can also issue contracts for June 2019 since that falls within the notice period.
Yet, there is no guarantee of liquidity in quarterly options contracts, the second person said. It’s only there in the near-month contracts, the person said. SGX’s contention is that liquidity or not, it can issue contracts and investors will be free to choose, the first person quoted above said.
The SGX also informed its clients that by then it will bring access to India products. The exchange is working with the NSE to arrive at a viable option by March next year, the first person said.
It’s still in the discussion stage, the second person said.