What is GIFT NIFTY, which started trading from July 3?

Though the SGX is expected to corner the bulk of the business initially, NSE International Exchange (NSE IX) expects to make inroads gradually.

What is the deal between SGX and NSE?

According to a five-year contract between the two, business will largely be shared on a 50:50 basis. Initially, for the business generated by Singapore, SGX will get 75 per cent of the revenue, while NSE will get the remaining 25 per cent. For any business generated by the International Financial Service Centre (IFSC) — which is currently very little in volume — NSE will keep 75 per cent of the business. Once a “threshold volume” is touched, sharing will be on a 50:50 basis for both the entities.

In the first trading session for GIFT NIFTY held on Monday, 90 per cent of the 30,000-odd trade volumes executed were through the SGX. NSE IX expects that international investors will gradually come directly to IFSC instead of routing through SGX.

Secondly, as per this deal, NSE IX will not be able to enter into similar arrangements with any other exchange. This contract can be extended for an additional two years after the five-year period concludes.

What is GIFT NIFTY?

On June 30, trading on SGX NIFTY ceased in Singapore and the entire trading volume and liquidity fully switched to GIFT IFSC. Therefore, it was rechristened GIFT Nifty. Currently, four products are being offered under the umbrella brand of GIFT Nifty — GIFT Nifty 50, GIFT Nifty Bank, GIFT Nifty Financial Services and GIFT Nifty IT derivatives contract.

How important is this switch for India?

This migration was first initiated by Prime Minister Narendra Modi in July 2022. However it was only in April this year that Singapore agreed to a full-scale switch of Nifty by July 3.

“GIFT Nifty is an important milestone for GIFT IFSC and its outreach towards foreign investors and enhancing the capital market ecosystem in GIFT City… Over the past two decades, SGX has been our bridge to the world. It has linked two of the fastest growing economies of the world,” said Ashish Chauhan, MD and CEO of the National Stock Exchange, at GIFT City on Monday.

“This is the first of its kind trading link, with trading and matching in India and clearing and settlement in Singapore,” saidLoh Boon Chye, CEO of Singapore Exchange.

The GIFT NIFTY starts at 6:30 am in Asia time zone and continues till 3:40 pm. The second session from 4:35 pm to 2:45 am (next day) targets investors from the United States and Europe.