NSE, SGX agree to withdraw arbitration proceedings

Mumbai: The National Stock Exchange (NSE) and Singapore Exchange (SGX) have ended their four-year-old legal dispute over the abrupt termination of a licence that allowed India’s equity derivative products to be traded in the island nation.According to an official statement from NSE and SGX, both exchanges have decided to withdraw the arbitration proceedings and are in final stages of the creation of a special platform at the International Financial Services Centre (IFSC), GIFT City, Gandhinagar. The arrangement is similar to the connectivity that was established between stock exchanges in Hong Kong and mainland China in 2017.As per the proposal, SGX will route the Nifty trades through IFSC, GIFT City. The development will be a shot in the arm for IFSC, enhancing liquidity on the platform significantly. Trading volumes on SGX Nifty and SGX Bank Nifty are roughly the same as what happens onshore on NSE.With all the regulatory approvals in place, the new platform will go live in the next one year, said people privy to the development. They added that SGX has created a special purpose vehicle (SPV) in IFSC and all the Nifty and Bank Nifty trades happening on SGX will be routed through this SPV into NSE IFSC — a subsidiary of NSE in GIFT City. The settlement will be done by NSE IFSC Clearing Corporation. “The NSE-SGX Connect... is an important joint financial market initiative by India and Singapore,” said Injeti Srinivas, chairman, IFSC Authority.The government is also learnt to have provided special dispensations. There will be no need for Singapore-based brokers to register with Indian authorities or provide additional KYC documents.“Given the beneficial cost and tax structure IFSC markets offer, many offshore investors who were waiting for liquidity to increase before participating in the market are now likely to take the plunge,” said Suresh Swamy, partner, PWC.In 2016, SGX took NSE to court after a joint decision by Indian exchanges to stop licensing their indices and providing market data to foreign bourses with the aim of trying to prevent more of the Indian equity derivatives market from going offshore.Another crucial part of the framework is the arrangement worked out between the market regulators of both the countries. Being an SPV established at IFSC, both IFSC Authority and the Securities and Exchange Board of India will have regulatory purview over the SGX entity. Also, both SGX and the Monetary Authority of Singapore have agreed to provide Sebi information regarding the KYC and other documentation of the Singapore entities in cases wherever required.

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