SGX-NSE resume tie-up talks on GIFT City; arbitration proceeding deferred

The Singapore Exchange (SGX) and the National Stock Exchange of India (NSE) have resumed discussion for potential collaboration at Gujarat International Finance Tec (Gift) City, India’s only International Financial Services Centre (IFSC).

The talks between the two exchanges had stalled amid a legal tussle over the launch of new products by the Singapore bourse. Collaboration at Gift City could connect the trading systems of NSE and SGX and enable the clients of the Singapore bourse to deal in Indian derivatives.

Gift-connect between SGX and NSE could give a further boost to volumes and help resolve the tussle between the two parties, say experts.

The move to terminate licensing agreement by Indian exchanges with their counterparts will virtually halt offshore trading of India products once the notice period ends. To counter the move, SGX—where trading volumes in India products are quite popular—launched the launch of new India products to replace Nifty licensed products.

The move was challenged by NSE as the new products were an exact replica of Nifty products that it licenses. The matter has gone into arbitration.

“Pending the outcome of the discussions, the learned arbitrator has granted a deferment of the arbitration proceedings between SGX and IISL, the National Stock Exchange (NSE)’s index company,” SGX said in a statement on Wednesday. However, the directions under the arbitration order remain effective, which means SGX will not be able to launch its new India products.

“SGX and NSE will jointly engage and consult relevant stakeholders on the proposed collaboration,” it added.

Trading volumes on NSE IFSC at Gift City are seeing a gradual pick up. Earlier this month, volumes crossed the $500-million mark for the first time.

Meanwhile, market regulator Securities and Exchange Board of India (Sebi) met with its Singapore counterpart Monetary Authority of Singapore (MAS) on Tuesday to discuss the SGX-NSE issue.

“SEBI and MAS held discussions on various issues of cooperation, including the amicable resolution of the NSE and SGX issue,” the market regulator said in a statement.

“Both regulators agreed that the collaboration between both authorities would be further strengthened so as to derive benefits for capital markets of both the countries. Both regulators also agreed that NSE and SGX would carry out necessary discussions to come up with a solution that is acceptable to both the parties,” the statement added.