Topic 3: TRADE IN INDIA: GIFT NIFTY

In July 2023, begins the trading of SGX Nifty in Gujrat (Gift City, Gandhinagar) which is renamed as GIFT Nifty. On 30th June 2023, trading of SGX Nifty ceased in Singapore. The trading volumes and liquidity fully switched to GIFT IFSC (International Financial Service Centre). Currently there are 4 products being offered – GIFT Nifty 50, GIFT Nifty Bank, GIFT Nifty Financial Services and GIFT Nifty IT derivatives contract. This is the first cross border initiative in connecting India and Singapore’s capital markets. This move will provide the bulk of business in NSE International Exchange (NSE IX). The five year contract has been signed between India and Singapore, where business will largely be shared on 50:50 basis. Initially for the business generated by Singapore SGX will get 75% of the revenue and 25% to NSE. For any business generated by IFSC, NSE will keep 75% of the business. After the threshold volume is touched sharing will be on 50:50 basis for both the entities. 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.

GIFT Nifty would be an important milestone for GIFT IFSC and its outreach towards foreign investors and enhancing the capital market ecosystem in GIFT City. This is the first of its kind trading link, with trading and matching in India and clearing and settlement in Singapore. Gift Nifty will be open in two sessions and will be accessible for almost 21 hours. One session is from 6:30 am to 3:40 pm, while the other one is from 4:35 pm to 2:45 am. This is more than the SGX Nifty, which used to trade for 16 hours from 6:30 am to 10:30 pm. The new timings mean that it will overlap with Asia, European and US trading hours. We can check Gift Nifty contracts on the NSE IX website. The retail investors would not have any impact on their investment by shifting NSE IX as it is just a simple migration from one exchange to another. Moreover Indian Retail investors are not eligible to trade in GIFT Nifty under the Liberalised Remittance Scheme (LRS). Since Reserve Bank of India (RBI) does not allow the use of $250000 per year per person for leveraged traders that also includes futures and options. But Indian brokers and subsidiaries can sign up for trade through non residents and family owned offices of wealthy Indians as clients. Any trading member Indian or foreigner, registered or non registered can sets up its office through subsidiary/branch model can start trading in GIFT Nifty products by taking membership of NSE IX.



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