The Singapore Exchange (SGX) and India’s National Stock Exchange (NSE) are set to launch the SGX NSE Connect at the Gujarat International Finance Tec-City (GIFT City) from July 3; nearly four years after it was first envisaged as a part of an exercise to stop export of domestic markets.
The GIFT Connect brings together international and onshore GIFT participants to create a bigger liquidity pool for Nifty products on NSE IFSC (Nifty Contracts). Currently, trading in Nifty contracts at GIFT City is optional with bulk of the volumes still taking place on the Singapore bourse.
“Full-scale operation of the NSE IFSC-SGX Connect with the transition of SGX Nifty derivatives to NSE IFSC will take place on July 3, 2023. Following the transition, all US dollar denominated Nifty derivatives contracts will be exclusively traded on NSE IFSC,” the Singapore Exchange or SGX said in a notice.
The upcoming operation follows years of negotiation and arbitration between governments, agencies and market regulators of India and Singapore before a collaboration between both authorities to derive benefits for capital markets of both the countries was agreed upon.
The new system will allow market players to trade USD denominated Nifty Contracts at NSE IFSC, clear and settle at SGX-DC, an internationally recognised clearing house; thus offering the best of three worlds.
Also read: SGX-NSE Connect to be launched soon, says Indian envoy
The SGX Nifty 50 Index Futures contract is one of the most popular overseas derivatives contracts traded at the SGX, with 7.3 million contracts traded so far this year. Besides Nifty50, Nifty Bank index and Nifty 50 Index Options are also traded at the SGX.
With these volumes now migrating to Gandhinagar, market players expect the GIFT, an initiative led by Prime Minister Narendra Modi, to get a huge fillip.
The measure is seen as a major step to make GIFT city a hub for international investments, according to experts, who added that it would level the playing field between Indian and foreign investors as well.