Gearing up for GIFT City_

For firms looking to cash in on opportunities in the Indian markets, the recent announcement by Singapore Exchange (SGX) that it expects to open its offshore office at Gujarat International Finance Tec-City (GIFT-City) by the end of April, comes as encouraging news.

Currently, India’s two biggest exchanges, the National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE), both operate out of GIFT City. Neither the NSE-IFSC, nor BSE’s India International Exchange (INX), have yet benefited from sufficient volume, or liquidity to capture the interest of international players.

However, that may be about to change.

Introducing the new trading link: SGX-Connect

Following a two-year dispute between NSE and SGX that was settled in September last year, the establishment of SGX’s offshore office at GIFT City is the latest step in enabling members of both SGX and NSE-IFSC to trade Nifty derivatives directly from India.

The new trading link, tentatively named SGX-Connect, will aim to provide a larger pool of liquidity in Nifty products. International participants will benefit from the fact that all contracts traded via GIFT City are settled in US dollars, so FX exposure is reduced.

Trading hours are allowed up to 22 hours per day, making things a lot easier for US and European-based traders to operate from their individual time zone. And the competitive tax structure and supportive regulatory framework will also encourage global trading and investment firms to participate.

Further trading infrastructure developments to keep an eye on

Other positive news for the region is that the NSE recently announced its intention to set up an international bullion exchange, clearing corporation and depository at GIFT City. They have successfully completed the first step of signing an MOU with INX, Multi Commodity Exchange of India, National Securities Depository and Central Securities Depository (India).

India is certainly an exciting market and when looking at recent market data, it continues to see significant growth in trading activity. In fact, in 2020, the NSE was once again the top global exchange in terms of total derivatives volume, with 8.85 billion contracts traded, up 48.1% on 2020.

Demand for connectivity into India accelerating ahead of SGX-Connect go-live

With all of this going on, it’s perhaps not surprising that we’re now seeing a marked increase in interest for connectivity into India in general and GIFT City in particular. Global and financial market participants are watching the latest developments with interest and starting to gear up for when SGX-Connect goes live. The launch is currently targeted for Q3 2021, although given the current situation in India with the COVID pandemic, that could well change.

Regardless of when these initiatives do come to fruition, BSO is perfectly positioned to help customers take advantage of the expected growth of GIFT City, as we already have strong partnerships with both BSE’s INX and NSE-IFSC, with infrastructure in place at both exchanges. In fact, BSO is the only non-domestic official service provider to deliver connectivity into NSE-IFSC at GIFT City.

Conclusion

As volumes start to pick up, firms will want to ensure they are working with an infrastructure provider that can get them up and running quickly, provide high performance and deliver the most secure, reliable, low-latency connectivity between GIFT City and other financial centres around the world including Singapore, Dubai, London, Chicago. Particularly if, once SGX-Connect takes off, other global exchanges such as London Stock Exchange or CME also decide to set up shop there.

At BSO, we pride ourselves on our uniquely engineered international network, specialising in connecting emerging markets such as GIFT City and established markets across the globe.