NSE-SGX Arbitration Order Unlikely This Year
Interim stay on launch of new SGX derivatives to continue for three weeks after the final order.
Singapore Exchange won’t start offering new products linked to the National Stock Exchange’s indices and India’s largest bourse will continue sharing data with its partner till the high court-appointed arbitrator finally rules in the dispute, according to an interim order.
The NSE will have to extend its licensing arrangement beyond the last day of August 12, Justice SJ Vazifdar, the arbitrator, said in the interim order passed after hearing both the parties for five days. The ad-interim injunction on SGX’s April 11 circular against new contracts based on NSE’s publicly available prices will continue, it said.
The dispute stems from NSE’s decision to terminate its data-sharing pact with its Singapore partner. The Indian bourse, along with two other domestic exchanges, decided to stop sharing data with foreign peers to prevent volumes from shifting overseas and to promote trading in GIFT City, the international financial hub in Gujarat. Since such contracts are used by foreign investors to hedge their position in India, SGX decided to offer derivatives mirroring NSE’s indices based on public data.
Hearings on evidence in the case are expected to start in early 2019, SGX said in a statement on June 16. NSE, in a statement the same day, confirmed the interim order. BloombergQuint had on June 15 reviewed a copy of the order.
The Indian exchange’s 180-day notice period was to end on August 12. It has agreed to the arbitrator’s directions and issued a letter to the Singapore Exchange extending the effective date of termination, a person familiar with the matter said requesting anonymity.
The arbitrator suggested a timeline to expeditiously adjudicate the matter:
- Aug. 3: The NSE should submit its claims and relevant documents.
- Sep. 26: The SGX should submit its counter-claim and documents with evidence.
- Oct. 30: The NSE should file its reply to SGX’s counter-claim.
- Nov. 2: The arbitrator would circulate drafts between both parties.
- Nov. 19: The arbitrator would complete discovery and inspection.
- Nov. 21: The arbitrator would hear framing of issues and give further directions based on evidence and expert evidence.
The timeline suggests that SGX’s Nifty Futures will continue to trade in Singapore at least till the end of the year as the order directed the NSE to extend its licensing arrangement with the Singapore bourse for two successive contract months after the final order is passed.
“If the award is declared in the first half of the calendar month, license termination will be extended until the last Thursday of the succeeding calendar month,” the arbitrator’s interim order reads. “In case, it’s declared in the second half of the month, the termination will take effect on the last Thursday of the second succeeding calendar month.”
The timeline for arbitration won’t be extended, the order said. An expert on stock exchange licences, the arbitrator said, will be involved for gathering evidence in the matter.
On May 29, the Bombay High Court had extended its May 21 interim stay after the NSE challenged the SGX’s new contracts and appointed the arbitrator. Justice Vazifdar said that the Singapore bourse will not be allowed to launch any equity derivatives linked to the NSE indices during the arbitration trial and for three weeks after the final order is passed.
The arbitrator will meet the two sides on June 18 to give further directions.