Sources say the regulators of both the countries are keeping a tab on the development and also supervising the product specifications and operational issues.
“All stakeholders want to resolve the ongoing legal tussle. Regulators have asked respective stock exchanges to find a commercial solution which is acceptable and feasible to both,” said a source.
Sources say there could be some changes required to the IFSC regulations to facilitate the proposed plan.
In an email response to this newspaper, NSE spokesperson said, “The matter is sub judice. Hence, we cannot offer any comment on the matter.” An query sent to SGX did not elicit an immediate response. NSE and SGX restarted talks over GIFT City following a meeting held between the Securities and Exchange Board of India (Sebi) and its Singapore counterpart Monetary Authority of Singapore (MAS). “Sebi and MAS held discussions on various issues of cooperation, including the amicable resolution of the NSE and SGX issue,” Sebi had said in a statement on July 25.
“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.
According to experts, GIFT-connect between SGX and NSE would enable the Singapore bourse’s clients to deal in Indian derivatives. Just like SGX, Gift City is a low-cost trading destination as it offers exemption from capital gains, securities transactional tax (STT) and stamp duty. At present, dollar-denominated contracts of Nifty are traded at NSE IFSC. In February, the NSE and BSE decided to stop giving data access to foreign bourses such as Singapore and Dubai. The move was to curb offshore derivatives trading in Indian products.
To counter the move, SGX, where trading volumes in Indian products accounted for substantial volumes, announced 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 licensed. The matter latter went into arbitration.
Currently, arbitration proceedings got deferred after NSE and SGX resumed talks over GIFT City. “Pending the outcome of the discussions, the learned arbitrator has granted a deferment of the arbitration proceedings between SGX and IISL, the NSE’s index company,” SGX had said in July.
However, the directions under the arbitration order remain effective, which means SGX will not be able to launch its new India products. In the offshore markets, NSE's Nifty is traded on Singapore bourse and BSEs Sensex is traded on the Dubai Gold and Commodity Exchange (DGCX). The trading at this destinations could virtually stop as Indian bourses have snapped licensing and data-sharing ties.
 "Illustration by Ajay Mohanty")
