MUMBAI: The National Stock Exchange (NSE) and Singapore Exchange (SGX) have got preliminary approvals from their respective regulators to move the Nifty and other products traded on SGX at present to the offshore trading center at International Financial Service Centre (IFSC), Gift City, Gujarat — a development that augurs well for the offshore trading volumes at IFSC, as well as ending a long contentious issue of Nifty trade at SGX taking away the volumes from the domestic market.
“What it will do for Gift City ecosystem is … It will actually bring back markets that some would argue was being exported outside,” said Vikram Limaye, MD & CEO, NSE. He said the exchange has been working on it for 18 months, engaging with all market participants to create the right kind of structure.
The Securities and Exchange Board of India (SEBI), as well as the Monetary Authority of Singapore (MAS), have approved the joint proposal NSE and SGX submitted earlier this year, NSE said.
“The proposed NSE International Financial Service Centre-SGX Connect aims to bring together the trading of Nifty products in Gujarat International Finance Tec-City (GIFT) and create a larger pool of liquidity comprising international and home market participants,” NSE said.
The Connect model that needs further approvals will enable IFSC members of SGX and NSE to access Nifty products in GIFT, while managing their exposures through their respective clearing corporations. NSE hopes to operationalise the system in 12 months.
“We have an operating exchange in Gift City, and a clearing corporation. We are consolidating the liquidity in Gift City and those that will transition from Singapore. It will get into one liquidity pool. SGX will set up a subsidiary and SPV in Gift City, which will route trades from Singapore into Gift City,” Limaye said. Currently, Nifty trading volumes in Gift City is around $150 million and the SGX Nifty volumes at an average $1.8 billion a day.