The trading of the Nifty futures contracts on the Singapore Exchange (SGX) will begin at International Financial Service Centre (IFSC) in Gandhinagar from Friday onwards. Prime Minister Narendra Modi will launch the dollar-denominated Nifty futures and inaugurate the India International Bullion Exchange (IIBX) at the Gujarat International Finance Tech (GIFT) City, reported Economic Times.
The SGX Nifty futures will be traded simultaneously at SGX and GIFTIFSC for the first few months after the soft launch on Friday. Later, SGX will discontinue the product from Singapore, the report added.
A Special Purpose Vehicle (SPV) named "NSE International Financial Service Centre (IFSC) SGX Connect" has been formed by the National Stock Exchange and SGX to launch the products at Gift City. SGX Nifty Futures will reportedly be traded at GIFT City for close to 19 hours a day.
Foreign investors who do not wish to trade in India use Nifty contracts on SGX. SGX initiated legal proceedings against NSE after the latter terminated its agreement with the Singapore-based exchange. In August 2018, India’s stock exchanges decided to stop licensing their indexes from August 2019 to foreign bourses amid concerns over a flight of trading to Singapore. The two exchanges withdrew proceedings after entering into an agreement for a connectivity pact at GIFT City. Nifty futures volumes in Singapore are 80% higher than in India.
The average daily volume on SGX was Rs 26,000 crore in 2021, compared to Rs 14,500 crore on the NSE in the same period. Foreign investors prefer Singapore due to favourable taxation and the availability of dollar-denominated products.
The government has lowered taxes at GIFT City to make it more competitive with respect to other hubs such as Singapore, Dubai, and Hong Kong.