GIFT connect: NSE-SGX talks hit dead end

MUMBAI: The future of Gujarat International Finance Tech (GIFT) City has come under a cloud with the National Stock Exchange of India Ltd (NSE) reaching a dead end in its talks with the Singapore Stock Exchange (SGX).

Talks between the two premier exchanges over bringing liquidity to the upcoming international finance centre through a so-called GIFT connect have stalled, two people aware of the matter said.

A GIFT connect was all the

TALKS BETWEEN THE TWO BOURSES FAILED LARGELY DUE TO LOW VOLUMES AT GIFT, LACK OF INFRASTRUCTURE

more important in the wake of the ongoing legal tussle between NSE and SGX.

The battle began on February 9 when Indian exchanges barred overseas bourses from trading in Nifty derivatives. On April 11, SGX announced a new product which works just like the Nifty, bypassing the Indian exchange. NSE tried to stall the launch slated for June 4 but negotiations failed, leading to NSE suing SGX on May 21.

“The negotiations between NSE and SGX included getting liquidity from offshore markets —SGX to GIFT—but it proved tougher than originally thought,” said the first of the two people quoted above, both of whom spoke under condition of anonymity.

“NSE was, in fact, willing to extend the deadline for cessation of SGX Nifty contracts beyond August if SGX established a GIFT connect. NSE wanted SGX’s brokers and clients to come to GIFT with a revenue and resource sharing arrangement. But SGX stuck to its decision of launching its own set of contracts as the two parties could not agree on terms of these arrangements,” he added.

Talks between the two exchanges failed largely due to lack of infrastructure, low volumes, lack of market structures and limited physical presence of foreign investors at GIFT in Gujarat’s Gandhinagar, the two people explained.

An email sent to SGX and a subsequent call for comments was not answered. An email sent to NSE did not result in a response.