03-Jul-2023
2 mins read
A momentous change in the global trading landscape in India commences today, July 3, as the renowned SGX Nifty morphs into GIFT Nifty. A whopping $7.5 billion of derivative contracts previously traded in Singapore will now shift to India. This significant transition is part of a larger movement of the Singapore Exchange base to the NSE International Exchange (NSE IX) located in Gandhinagar, Gujarat, popularly known as GIFT City. The move is set to transform the face of India’s trading market and elevate the status of GIFT City, the new financial hub in Gujarat.
Key Points to Note about GIFT Nifty and Its Significance
1. GIFT Nifty’s Diverse Portfolio
GIFT Nifty will introduce four key products: GIFT Nifty 50, GIFT Nifty Bank, GIFT Nifty Financial Services, and GIFT Nifty IT derivative contracts. This diversification underscores the vision behind the transformation and promises varied investment opportunities.
2. Landmark Move for Indian Economy
It marks the first time an international contract previously exported from India will be managed within the country.
3. Elevating GIFT City’s Profile
GIFT City, India’s premier international financial centre, stands to gain substantially from this change. The removal of FEMA restrictions by the RBI back in 2015 had already boosted GIFT City’s profile. With the relocation of derivative contracts from SGX Nifty, a corresponding surge in Indian bourses revenue is anticipated this fiscal year.
4. SGX-NIFTY’s Balanced Partnership
Existing open positions in SGX Nifty will shift to NSE IFSC Nifty in a liquidity switch, according to SGX. SGX’s head of equities, Michael Syn, revealed in an interview that SGX and Nifty would share costs and revenues approximately equally. While futures and options will trade in GIFT City, clearing will be handled by SGX.
5. Extended Trading Hours
Unlike the 16-hour operational window of SGX Nifty, GIFT Nifty will extend its trading time from 4 am IST to 2 am IST the next day. With this transition, all US dollar-denominated Nifty derivatives contracts will be exclusively traded on NSE IFSC.
6. GIFT Nifty as an Early Market Indicator
Previously, SGX Nifty played a significant role as an early market indicator for Indian markets. However, from July 3 onwards, this responsibility will shift to GIFT Nifty.
7. Enlarging the Global Investor Sphere
The NSE-SGX collaboration is expected to augment the Indian markets’ global reach. It will encourage participation from international investors not currently engaged with Indian capital markets.
Overall, the transformation of SGX Nifty into GIFT Nifty signifies a major shift in India’s financial market landscape. It is a step that places India firmly on the global financial map, promoting direct engagement with international investors and giving the Indian financial hub, GIFT City, a substantial boost.