Singapore Exchange ignores curbs, to list new India derivative products

Global index provider MSCI termed the move by Indian bourses to restrict derivatives trading and data feeds overseas anti-competitive, and said such a move may lead to unnecessary disruption.

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BSE, NSE, MSEI have stopped offering live prices to international bourses

Two months after stock exchanges — the BSE, the NSE and the Metropolitan Stock Exchange of India — decided to curb all licensing agreements and stop offering live prices to international bourses, the Singapore Exchange (SGX) on Wednesday said it will list new India equity derivative products in June this year.

“SGX will list new India equity derivative products in June 2018, to provide market participants with continuity and the ability to seamlessly transition their current India risk management exposures,” Singapore Exchange said in a statement. “These products also add to the existing India Single Stock Futures offering, which has garnered active participation from global institutional clients since its launch, demonstrating the demand for access products,” the statement said.

Reacting to the Singapore Exchange’s move, an NSE spokesperson said, “we are examining the announcement by SGX on April 11, 2018 regarding the launch of new SGX derivative products on Indian securities in lieu of the SGX NIFTY license which expires in August 2018. We have asked for more details from SGX on the product structure and hope to have a conversation with the SGX team to get a better understanding of the product.”

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“Post that conversation and review of the material in the public domain and the announcement made by exchanges in February, we will need to make an assessment whether or not the products announced by SGX are compliant with the announcement made by the Indian exchanges on February 9, 2018. We will also have a discussion with other exchanges and the regulator once we have a better understanding and then determine course of action,” NSE said.

Global index provider MSCI termed the move by Indian stock exchanges to restrict derivatives trading and data feeds overseas anti-competitive, and said such a move could lead to unnecessary disruption.

The Singapore Exchange further said it is working with Indian counterpart NSE to evaluate a joint trading and clearing model in Gujarat International Finance Tech (GIFT) City. “While implementation is not feasible before expiry of the licence agreement with NSE, SGX remains committed to engagements with NSE and other relevant stakeholders in India towards a collaboration in GIFT city,” the statement noted.

Michael Syn, Head of Derivatives at SGX further noted that SGX has worked hard over the past two decades to promote the development and internationalisation of India’s capital markets. “We are still exploring a solution that would bring the liquid international market directly into GIFT City, in a way that meets our clients’ regulatory requirements while growing the overall market. In the meantime, we will continue with our new India equity derivative products, which international portfolio investors need to maintain for exposure to India,” Syn said.

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SGX had over the years become the most popular way for foreign investors to bet on Indian equity indexes with Nifty 50 futures tracking the NSE’s main index. SGX’s Indian derivatives products account for about 12 per cent of its total derivatives trading volume. Over the last few years, the exchange has rapidly expanded its suite that have helped to power growth in earnings while its cash equities business weakened.