INDIA’S STOCK EXCHANGE SUES SINGAPORE BOURSE

NSE trying to stop launch of derivatives that may replace Nifty 50 contracts

THE National Stock Exchange of India Ltd (NSE) sued Singapore Exchange Ltd (SGX) in a court, here, escalating a dispute that threatens to leave international investors without one of the world’s most widely used offshore futures contracts.

NSE is trying to stop its Singapore counterpart from launching derivatives that could replace the Nifty 50 contracts that have traded in the city-state for 18 years.

Global funds use these instruments to hedge their positions in one of Asia’s biggest equity markets. Indian exchanges ended agreements that allowed offshore derivatives in February, leaving SGX and others scrambling.

“This is a big mess,” said David Shin, Asia head of global equity derivative sales at TD Securities in Singapore.

“I can’t see how SGX would go through with the launch when this is in the air. There’s a lot of grey here, because if investors do trade the new contract knowing this legal case is out there, is there legal liability that cuts through to the investors of the new contracts?”

SGX, which announced the NSE’s legal action in a statement yesterday, said it had “full confidence” in its legal position and would “vigorously” defend itself.

The Singapore bourse’s stock tumbled on news of the suit, falling the most since April 4.

The Mumbai court is expected to hear the case today, according to sources.

The exchange’s move is another ratcheting up of tensions between bourses in India and Singapore amid efforts by the former to keep trading onshore.

China and Malaysia are among other emerging economies in the region that have taken steps to keep control of capital flows even as they push to further integrate into global markets.

In India’s case, it has been promoting a tax-free trading zone in Prime Minister Narendra Modi’s home state, known as Gift City, as an alternative to offshore centres.

Singapore has become a hub of offshore trading for many markets.

In response to the February action, many analysts cut their ratings on SGX’s stock.