“It’s a soft launch for SGX Nifty Futures on the GIFT-IFSC,” said one of the people in the know. “For the first few months, SGX Nifty Futures will trade simultaneously on GIFT-IFSC and SGX. Later, SGX will stop trading the product from Singapore.” NSE and SGX did not respond to ET queries.
The National Stock Exchange and SGX have formed a Special Purpose Vehicle (SPV) – NSE International Financial Service Center (IFSC)-SGX Connect – to launch Nifty products in Gift City. SGX Nifty Futures will be traded at GIFT City for nearly 19 hours a day, the person familiar with the matter said.
Smart contracts on SGX are popular among foreign investors, who did not wish to trade in India. At its peak, Nifty’s trading contributed up to 10% to the Singapore Stock Exchange’s revenue. In early 2018, Indian stock exchanges decided to stop licensing their indices to foreign stock exchanges from August 2019 due to concerns over the flight of foreign business activities to Singapore.
SGX dragged NSE into a legal dispute after the agreement was terminated. The matter eventually went to arbitration. The two exchanges withdrew arbitration in September 2020 after deciding to enter into a connectivity pact in Gift City.
Nifty Futures volumes in Singapore are almost 80% higher than in India. In 2021, an average daily volume on NSE was ₹14,500 crore compared to ₹26,000 crore in SGX. Foreign portfolio investors (REITs) had shifted their positions to Singapore due to more favorable taxation and a preference for a dollar-denominated product.
In recent years, the government has also reduced taxes in the city of GIFT to compete with regional financial centers like Singapore, Dubai and Hong Kong.
“Trading on Gift City would benefit foreign investors who now enjoy an Alternative Minimum Tax (MAT) of 9%. National Exchange Members of India (ANMI). “Those who trade on Gift City will see the added value in terms of low operating costs and tax advantages for operating their business from the IFSC entity compared to the cost of setting up offices in foreign countries like Dubai and Singapore.”
Prime Minister Modi will also inaugurate the India International Bullion Exchange, which is jointly owned by NSE, Multi Commodity Exchange (
), India INX International Exchange, National Securities Depository (NSDL) and Services (India). Around sixty qualified jewelers have already been recruited.