The National Stock Exchange has termed Singapore Exchange’s plan to start derivatives based on Nifty indices a “blatant disregard” of its intellectual property rights and “breach” of the licence agreement as it sued the bourse in the Bombay High Court.
SGX was looking to gain at NSE’s expense through “commercial exploitation” and replication of its proprietary data —69 equity and 92 fixed income indices under the NIFTY brand of the NSE including Nifty50 and Nifty Bank indices, according to the petition that will come up for hearing on Wednesday. That would cause the exchange to lose out on revenue from licence fees, the petition said.
SGX announced that from June 4 it will start new contracts based on publicly available settlement data after the NSE decided to end its licencing agreement with the Singapore exchange. That came after India’s three stock exchanges decided to stop sharing data with foreign peers to prevent volumes from moving offshore and promote the international trading centre in Gujarat, Prime Minister Narendra Modi’s home state. Index and equity-linked derivatives are used by foreign investors to hedge their risk.
The NSE, in the petition, said the Singapore bourse’s new contracts will hurt its future prospects to licence its name and indices to other exchanges. The exact commercial value of the underlying data, therefore, was not stated in the petition as it could only be fully derived from its use, it said.
BloombergQuint is yet to receive replies to queries emailed to NSE and SGX late on Tuesday night.
Before the NSE decided to terminate its agreement with SGX, the Singapore bourse offered contracts linked to Nifty indices based on a May 2000 data-sharing contract. The agreement was last renewed on Jan. 29. On Feb. 12, NSE gave its partner a 180-day notice period to phase out the contracts.
The Singapore bourse’s three new derivatives—SGX India Futures, SGX Options on SGX India Futures and SGX India Bank Futures—are now slated to be launched on June 4. The investors who didn’t wish to migrate to the new products were asked to wind up all their outstanding open positions by June 1.
The Indian bourse alleged that SGX will not only be “using the settlement price/index value but also inherently using and unjustly benefitting from the unlined methodology, trade secret, goodwill, reputation and brand value that the numbers represent” as the licence agreement recognised and reinstated NSE’s rights repeatedly during the 17 years of partnership between the two exchanges.
Such a conduct, according to NSE’s petition, would also obviate all regulatory and statutory obligations on people while creating and administering indices.
The NSE has sought a stay on the launch and migration of investors to the allegedly “unlicensed products” of SGX.