 "NYSE, LSE plan to set up shop in GIFT")
Domestic bourses such as the BSE and the National Stock Exchange have already announced setting up international exchanges at GIFT to invite foreign investors to buy their products.
The latest to jump on the bandwagon is Multi Commodities Exchange of India (MCX), the largest commodities exchange in the country. MCX is planning to set up an international exchange for offering futures in gold and other commodities, including metals.
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A GIFT official confirmed that NYSE and LSE had approached the authorities to discuss plans in this regard. When contacted, P K Singhal, joint managing director of MCX, said the exchange was in talks with GIFT. “MCX is exploring the possibility once commodity derivatives are included in the GIFT mandate,” he said.
It is envisaged that GIFT, being set up as a special economic zone, will be India’s very own Dubai or Singapore, among the most successful international financial services centres (IFSCs) globally. Ramakant Jha, managing director and group chief executive of GIFT Company Ltd, said, “The Budget announcement on IFSC regulations is a much needed step to save the billions of dollars worth of financial services business, which India is losing to other global financial hubs such as London, New York, Dubai, Singapore and Hong Kong.”
He added an estimated Rs 1,334 crore a day, or Rs 2 lakh-crore a year, of rupee derivatives trading was going to locations outside India. “A substantial part of this trading can be captured by Indian firms if an appropriate regulatory and tax regime exists,” he said.
A sizeable part of Nifty futures volumes are traded on the Singapore Exchange. Though India is the world’s largest consumer of gold, prices in this segment are decided elsewhere. And, rupee-dollar futures are the most active at the Dubai exchange.
Along with these businesses, ancillary services, including those offered by intermediaries such as brokers, are also lost to other countries. Most large brokerage firms have set up shop in foreign market for offering these services.
These issues can be addressed if Indian exchanges offer their products at GIFT. Anyone who deals in foreign currencies can be a part of GIFT and Indian investors can use these services or invest up to $250,000 a year abroad. So far, for buying shares of foreign companies such as Facebook or Google, they had to approach foreign brokers to strike deals on their behalf.
On condition of anonymity, an official at an exchange said if allowed, domestic exchanges could tie up with their global counterparts and list their products and securities in a separate segment on domestic exchanges at GIFT.