SGX delays launch of India products
The Singapore Exchange (SGX) has put on hold its plans to launch new India derivatives products, following the Bombay High Court's injunction order obtained by the National Stock Exchange (NSE).
The Singapore bourse was planning to migrate all its existing client contracts on the SGX Nifty Futures to the new SGX India Futures from June. However, SGX now plans to continue offering NSE-licensed Nifty contracts until August 2018, when the agreement between the two bourses ends.
Through a circular dated April 11, SGX had announced the launch of three new India products — SGX India Futures, SGX India Bank Futures and SGX Options. As the products were similar to the licensed Nifty products, the NSE's index providing arm, India Index Services and Products (IISL), moved the Bombay High Court on May 21. On May 29, the court granted an interim injunction against the launch of SGX's new India derivatives products.
“In view of the uncertainty caused by IISL's action, and after consultation with stakeholders, we have decided to continue listing SGX Nifty
contracts until August 2018, as provided for under our licence agreement with IISL. This will enable our clients to manage their portfolio risks without interruption. We will reschedule the launch of our new India derivatives products, pending the outcome of the arbitration,” said SGX in a statement on Tuesday.
“SGX will contest the interim injunction and reserves all rights in respect of damages caused by IISL's action,” SGX added.
In February, domestic exchanges announced termination of data-feed and licensing agreements with their global counterparts to stop offshore trading in Indian products. The move put the NSE and SGX at loggerheads, as India products
accounted for a sizeable volumes on the overseas bourse. The Nifty index contributes nearly 10 per cent to SGX's equity derivatives revenue.
SGX has said investors largely trade in Nifty products on its platform for hedging their underlying India exposure. The new India products were for allowing foreign portfolio investors to maintain their exposure, SGX had said.
“IISL's action has adversely affected foreign investors who rely on the SGX's platform to manage the risks of their exposure to the Indian market, and significantly diminishes access to, and interest in, the capital markets in India. SGX remains open to a long-term solution that will benefit Indian markets,” the Singapore bourse said.