BW Explains: SGX Nifty Is Now GIFT Nifty, How It Impacts Indian Markets
The well-known SGX Nifty became GIFT NIFTY on 3 July, marking a historic shift in the world of global trading in India. All derivative contracts worth USD 7.5 billion that were previously traded in Singapore will now be transacted in India.
The launch of GIFT NIFTY will mark a crucial step in the transfer of the Singapore Exchange's base to the Gujarat city Gandhinagar's NSE International Exchange (NSE IX). The government plans to establish GIFT City in Gujarat as a rival to other international financial hubs like Dubai, Mauritius, and Singapore.
The move comes in the wake of the settlement of a five-year dispute between the National Stock Exchange of India. It is especially significant for Gujarat's GIFT city and the Indian commerce market. V Balasubramaniam MD and CEO of NSE International Exchange, called the move to be a “watershed moment in the history of India."
Four products in total—GIFT Nifty 50, GIFT Nifty Bank, GIFT Nifty Financial Services, and GIFT Nifty IT derivative contracts—will be included under the umbrella name.
So what does it mean for the stock market and the Indian investors? BW Explains it more.
According to the SGX, all open positions in SGX Nifty have been switched to NSE IFSC Nifty as part of a liquidity transfer. According to the agreement, the costs and profits will be distributed "roughly 50-50" between SGX and NIfty, according to Michael Syn, head of equities at SGX. The GIFT City will serve as the trading venue for futures and options, and SGX will handle clearing.
SGX Nifty is currently open for 16 hours, from 6:30 am IST to 10:30 pm IST. The GIFT Nifty, on the other hand, will have its operating hours moved from 4 am IST to 2 am IST the following morning. All Nifty futures contracts denominated in US dollars are being traded on NSE IFSC starting from Monday.
GIFT Nifty will serve as a market-timing indicator. The Indian market will no longer be governed by the SGX Nifty, which will no longer be the case starting on July 3.
The GIFT City has emerged as India’s first international financial centre. In 2015, RBI lifted the zone's FEMA limitations. The outcome of the transformation is the current fiscal year's revenue for Indian bourses is anticipated to increase due to the moving of derivative contracts brought on by the partnership between SGX and Nifty. Because of their higher average fees and volume, nifty derivative contracts used to be a significant source of income for SGX.
The NSE-SGX connection will aid Indian markets in broadening their appeal to foreign investors, particularly those who aren't already actively involved in Indian capital markets.
