A new derivatives trading and clearing link between Singapore and India is in business.
On July 29, the Singapore Exchange and the National Stock Exchange of India (NSE) announced that the NSE IFSC-SGX Connect is ready to trade and clear Nifty equity derivatives for global institutions.
SGX, which positions itself as a multi-asset exchange, has an active business providing the platform for the trading of Nifty products.
Back in 2018, India’s stock exchanges indicated their intention to halt the licensing of their indexes to foreign exchanges.
Besides concerns that trading activity was being channelled away, there were worries that the trades of derivatives at SGX, which has an earlier trading hour, had swayed the market’s direction when India’s exchanges start the day a few hours later.
Both parties agreed to the new joint venture framework in 2020.
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According to parties involved, the launch of the NSE IFSC-SGX Connect marks a major step towards further connecting the world’s investors to India.
Through SGX’s trading infrastructure in the Gujarat International Finance Tec-City (GIFT) City, investors in India and around the world can now trade Nifty contracts listed on NSE IFSC seamlessly and efficiently with global risk management and clearing standards. Investors also have real-time access to NSE IFSC market data.
Via the Connect, orders from SGX Group’s trading members are to be routed to NSE IFSC for trading and execution, with clearing and settlement through NSE IFSC Clearing Corporation and SGX’s Derivatives Clearing as the central counterparty.
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The NSE IFSC-SGX Connect was formally launched on July 29 by India’s Prime Minister Narendra Modi, Union Minister of Finance and Corporate Affairs Nirmala Sitharaman, Chief Minister of Gujarat Bhupendra Patel, Union Ministers of State for Finance Pankaj Chaudhary and Dr Bhagwat Kishanrao Karad, Minister of Finance, Government of Gujarat Kanubhai Desai, and International Financial Services Centres Authority (IFSCA) Chairman Injeti Srinivas.
The launch was at Gujarat International Finance Tec-City (GIFT) City.
The High Commissioner of the Republic of Singapore to India, Simon Wong, SGX CEO Loh Boon Chye, and NSE MD and CEO Ashishkumar Chauhan were also present at the event.
The following SGX members are already on board the trading and clearing link, with the remaining expected to do so in the coming months: Deutsche Bank; Morgan Stanley Asia (Singapore) Securities; OCBC Securities; Orient Futures International (Singapore); Phillip Nova; StoneX Financial and UBS.
SGX’s CEO Loh Boon Chye describes the rollout of the Connect as a “significant milestone” for SGX and NSE.
“It brings us one step closer to combining the growing domestic and international liquidity pools for Nifty products,” says Loh.
“We are confident that the Connect will be the key platform that connects the world to India, offering global investors unprecedented access to India’s capital markets,” he adds.
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Ashishkumar Chauhan, MD and CEO of NSE says the Connect will consolidate the liquidity pool for Nifty products in the NSE IFSC exchange and will facilitate access for global market participants in GIFT City.
“Consequently, it will give a boost to the IFSC capital markets eco system and is an important step towards making GIFT City a preferred global destination for capital market activities.”
"After close to two years of intensive preparatory work, NSE and SGX Group have now established a landmark Connect between India and Singapore that will enhance global investors’ access to India’s capital markets through the GIFT City ecosystem," says Lim Tuang Lee, Assistant Managing Director, MAS.
"We congratulate NSE and SGX Group on realising their shared vision and wish them every success as they continue to build on their long-standing partnership.”
“I take this opportunity to thank the Government of India, IFSC Authority, GIFT City authorities, SEBI, RBI and the government and regulatory authorities in Singapore for their guidance and support to NSE and SGX Group in making the Connect a reality,” says Lim.
