Indian bourses to stop providing data feeds to overseas exchanges
MUMBAI: In a bid to protect market liquidity, India’s national stock exchanges have decided to cancel licensing agreements for providing indices and securities related data feed services to any foreign exchange or trading platform.
In a joint press statement issued on Friday evening, National Stock Exchange of India Ltd, BSE Ltd and Metropolitan Stock Exchange Ltd said that any existing licensing agreements with overseas exchanges will be terminated.
“The existing licensing agreements for licensing indices/prices of Indian securities for trading derivatives on foreign exchanges and/or trading platforms shall be terminated with immediate effect, subject to the notice period mentioned in the respective licensing agreements,” the exchanges said in a statement.
This means the popular SGX Nifty futures contract will cease exist, after the six-month notice period expires in August.
The trigger for the move appears to be SGX’s decision to launch futures contracts on the top 50 Indian stocks starting February 5. While its market share in Nifty futures has expanded over the years, to 52% at last count, it’s the decision to launch single stock futures that has led to the current action.
The exchanges, Sebi and the finance ministry were in discussions over the past month to counter SGX’s growing market share and concerns that foreign exchanges are becoming price setters for Indian securities. SGX starts trading a few hours before Indian exchanges, and SGX Nifty futures are generally referred to by traders for early trading decisions.
“It is observed that for various reasons the volumes in derivative trading based on Indian securities including indices have reached large proportions in some of the foreign jurisdictions, resulting in migration of liquidity from India, which is not in the best interest of Indian markets,” the exchanges said. Exchanges used to provide real-time data online through dedicated private, high-speed, leased line circuits. This will stop.
Overseas exchanges SGX and DGCX are trading single stock futures without access to any data feeds, said a person familiar with the operations of these exchanges. As such, these trades can potentially continue. However, Vikram Limaye, managing director and chief executive of NSE, said the exchanges will still need data from somewhere.