Mumbai: Singapore Stock Exchange on Monday said that before its contract with National Stock Exchange of India Ltd (NSE) expires in August 2018, it will launch products that will succeed the Nifty family of products.
“As a market operator, we have an obligation to our international clients to provide them with solutions to manage their risks. Our successor products will provide certainty and continuity for our clients. At the same time, we continue to work with NSE to create a larger pool of liquidity comprising international and home market participants,” said Michael Syn, head of derivatives, SGX, in a press statement.
These successor products are expected to be similar to the popular SGX-Nifty which will cease to exist starting August 2018. This will allow its existing client base to continue to trade in Indian securities through its platform.
The move comes after India’s top two stock exchanges—NSE and BSE Ltd—on 9 February terminated agreements that allowed their index derivatives to be traded on overseas exchanges and data vendors from providing data to entities which would use it to trade on overseas exchanges.
Even as SGX is looking to launch similar products, it will need to find a new source for data feed as Indian exchanges will no longer allow data provided to third-party vendors for trading on overseas exchanges. This applies to index providers such as MSCI as well.
In response to the exchanges’ move, global index provider MSCI on 15 February said that it considers the move by Indian stock exchanges to restrict data feeds as anti-competitive and it could impact India weightage and India asset classification in its indices.
Additionally, SGX will work with NSE to develop a link that will allow foreign investors to trade on NSE’s International Exchange (NSE IFSC Ltd) in Gujarat International Finance Tech (GIFT) city while they clear their exposures through SGX.
“SGX believes that such a link will increase participation in GIFT and on SGX,” said SGX in the statement.
While SGX is looking at a GIFT venture there are inherent liquidity issues, regulatory gaps that will impact the launch of the SGX offering at GIFT.livemint