 "GIFT IFSC")
The SGX NSE Connect at Gift City IFSC will become fully operational from July 3 — nearly four years after it was first envisaged as a part of an exercise to stop export of domestic markets.
“Full-scale operation of the NSE IFSC-SGX Connect with the transition of SGX Nifty derivatives to NSE IFSC will take place on 3 July 2023. Following the transition, all US dollar denominated Nifty derivatives contracts will be exclusively traded on NSE IFSC,” the Singapore Exchange or SGX said in a notice.
Currently, trading in Nifty contracts at Gujarat International Finance Tec (GIFT) City is optional with bulk of the volumes still taking place on the Singapore bourse.
The SGX Nifty 50 Index Futures contract is one of the most popular overseas derivatives contract traded at the SGX, with 7.3 million contracts traded so far this year. Besides Nifty50, Nifty Bank index and Nifty 50 Index Options are also traded at the SGX.
With these volumes now migrating to Gandhinagar, market players expect the GIFT, an initiative led by Prime Minister Narendra Modi, to get a huge fillip.
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"With the transition, we expect more inflow of US dollars and foreign capital to India. While offering an equal playing field for both the Indian and foreign investors, the move will reduce the impact of offshore trading. This is also a major step to make GIFT city a hub for international investments," said Rohit Jain, managing partner, Singhania & Co.
“Trading of NIFTY Futures on NSE IFSC SGX Connect symbolises the futuristic role of IFSC in India. It shows the immense potential of IFSC to offer the entire gamut of financial services to global investors and organisations from Indian shores seamlessly,” said Saurabh Tiwari, Partner, DSK Legal.
SGX has said it will perform a liquidity switch after close of business on June 30 to prepare for the transition of outstanding SGX contracts to NSE IFSC contracts. All the positions will be converted on a 1:1 ratio basis and all open positions will be migrated to NSE IFSC.
In an earlier joint update in December, NSE had said that 14 SGX clearing members had been on-boarded for the transition.
The arrangement between both the exchanges was proposed after the Indian bourses decided to end licensing agreements with their overseas counterparts in 2018. The decision was aimed at bringing liquidity and stop trading in domestic products on overseas exchanges.
