Asia’s financial marketplace stands on the cusp of a significant transformation as a $7.5 billion derivative trade departs Singapore to dock at India’s Gujarat International Finance Tec-City (GIFT City). The shift results from the impending activation of a cross-border trading link between the Singapore Exchange (SGX) and India’s NSE Nifty 50 Index, their nations’ premier bourses.
Previously christened SGX Nifty under Singapore’s purview, the futures contract will don a fresh avatar as GIFT Nifty from July 3. Pending orders stand poised for rerouting to GIFT City, Gujarat’s rising star in the financial constellation.
This strategic switch from SGX to the NSE International Exchange at GIFT validates the endeavours of the Indian government to reclaim India-centric trading from global financial nodes such as Dubai, Mauritius, and Singapore. An infusion of liquidity appears on the horizon as Singapore orders funnel into the Indian platform, accommodating local brokers operating under the International Financial Services Centre (IFSC) banner.
With an astounding $7.5 billion worth of derivative contracts on the move, Asian financial markets turn a page in their history. This shift placates a five-year-long discord between SGX and NSE. The bone of contention revolved around SGX’s aspiration to usher single-stock futures trading for some of India’s industrial titans, a move that ruffled feathers in New Delhi, which was nurturing its equity market.
Nifty derivative contracts propped up SGX’s equity-derivative volumes, earning a silver medal after SGX FTSE China A50 Index futures in the fiscal year 2022. These contracts significantly boosted the bourse’s revenue by contributing to elevated average fees and volumes.
An equitable division of both costs and revenues punctuates the new pact between SGX and Nifty, promising a balanced collaboration. The GIFT City hosts futures and options trading festivities, while SGX undertakes the solemn duty of clearing.
This monumental transition underscores India’s burgeoning influence within the global financial services industry, hinting at amplified cohesion amongst Asian financial markets. A testament to a progressively interconnected regional economic construct, this move strides towards the genesis of a robust financial ecosystem within Asia.
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