National Stock Exchange of India sues Singapore Exchange to stop launch of derivatives

National Stock Exchange of India Ltd (NSE) is suing the Singapore Exchange Ltd (SGX) via the Bombay High Court in bid 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.

The Nifty 50 is the flagship index on the National Stock Exchange of India Ltd. (NSE). The Index tracks the behavior of a portfolio of blue chip companies, the largest and most liquid Indian securities. SGX and NSE signed a licensing agreement in March 2000 that allows futures and options based on the Nifty 50 Index to trade in Singapore.

SGX has acknowledged in a press release on Tuesday (22 May) that it has been notified by the NSE of an application made in the Bombay High Court for an interim injunction on its new products.

SGX stated that it has full confidence in its legal position and will vigorously defend this action.

It then added that the clients can continue to trade per normal, "Our new India derivative products, which have received the relevant regulatory approvals, will list in June 2018 and allow our clients to seamlessly transition their India risk management exposures."

Michael Syn, Head of Derivatives, SGX, said, "SGX has a responsibility to provide risk management tools for our global clients and ensure there is no disruption to the marketplace. Our new India equity derivative products are essential to enable institutional investors to maintain their current portfolio risk exposure to the Indian capital markets."

"We have, from the onset, expressed to NSE that there is a need to maintain liquidity in the international India equity derivatives market, in order to connect international participants to GIFT IFSC. We remain open to working with NSE and other relevant stakeholders to develop a solution that meets the risk management needs of global market participants," he added.

Bloomberg quoted Gopalan Sridhar, a Singapore-based fund manager at Aquarius Investment Advisors Pte saying, “The principal objective is to prevent India’s turnover from being affected by overseas venues" and that “NSE is trying to increase access to international investors by increasing trading hours and allowing U.S. clients to trade.”

In February, India’s national exchanges made a surprising announcement that they would end all licensing agreements and stop offering live prices to overseas venues. The move drew a rebuke from MSCI Inc and investors, who slammed the move as anti-competitive.

This entry was posted in Finance.

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