The Singapore Stock Exchange or SGX Nifty, traditionally used to gauge the opening cues for Indian markets has been rebranded as GIFT Nifty from today i.e. 3 July. All the derivative contracts worth $7.5 billion will shift from the Singapore Exchange to the NSE International Exchange (NSE IX) in Gandhinagar, Gujarat.
In the past, Singapore Exchange had a licensing agreement with NSE that allowed it to offer trading in Nifty futures and options in Singapore. SGX Nifty was the first indicator traders used to check in the morning before Nifty opens for trading at 9:15 am.
In 2018, National Stock Exchange (NSE) ended its licensing agreement with the exchange. Later, Singapore Exchange launched derivative products that NSE said breached its intellectual property rights. After the matter reached court, both parties agreed to a tie-up in September 2020.
What Is GIFT Nifty?
GIFT Nifty is the rebranded version of SGX Nifty as all open positions in SGX have been shifted to NSE International Exchange ISFC Limited (NSE IX) with effects from today. NSE IX is a subsidiary of NSE based in GIFT City. Stock exchanges functioning in the GIFT City are permitted to offer to trade in securities in any currency other than the Indian rupee.
Now, US dollar-denominated contracts of Nifty futures will trade in NSE IX instead of the Singapore Exchange. NSE IX works under the regulatory framework of the International Financial Services Center Authority (IFSCA).
The umbrella brand GIFT City will include a total of four products, which are GIFT Nifty 50, GIFT Nifty Bank, GIFT Nifty Financial Services and GIFT Nifty IT derivative contracts.
V Balasubramaniam, MD and CEO of NSE International Exchange described the move to be a “watershed moment in the history of India,” reported The Economic Times.
GIFT Nifty Timings
GIFT Nifty will be available for around 21 hours, and it overlaps with Asia, Europe, and US trading hours. It will be open in two sessions, from 6:30 am and 3:40 pm and then again from 4:35 pm to 2:45 in the second session.
Who Can Trade At GIFT Nifty?
According to NSE IX, any trading member of Indian or foreign registered or non-registered setting up its office through a subsidiary or branch model can trade in the GIFT Nifty products by getting a membership of NSE IX. Currently, there are more than 50 brokers that have set up units in the GIFT city. These trading members are permitted to execute a trade on their accounts and the account of their clients.
However, under the Liberalised Remittance Scheme (LRS), the GIFT Nifty will remain out of reach for Indian retail investors. The RBI disallows the use of the $2,50,000 per person per year for leveraged traders, including futures and options, as per LRS.
SGX IFSC India Connect, a special-purpose vehicle company of the Singapore Exchange, has started routing all the orders from international clients to NSE IX for trading and execution. The executed trades will be cleared and settled through NSE IFSC Clearing Corporation (NICCL). SGX-DC will act as the central counterparty for SGX clearing members.
