The National Stock Exchange (NSE) is hopeful of consolidating trading volume at its subsidiary NSE IFSC Exchange in Gujarat's GIFT City in the long term even as it awaits the outcome of offshore derivative tussle with the Singapore Exchange, a top official has said.
However, NSE received a temporary setback in the case this weekend after a court-appointed arbitrator had allowed the SGX (Singapore Exchange) to continue listing and trading of SGX Nifty contracts beyond August 2018 for at least two successive contract month maturations beyond the arbitration's completion date.
"Let's wait for the outcome of SGX case as they hold lot of offshore funds," NSE managing director & CEO Vikram Limaye told PTI.
On consolidation of offshore derivative volumes for Nifty futures in the ujarat International Finance Tec-City (GIFT City), he said, "We have received Commodities Futures Trading Commission (CFTC) nod for NSE and in few months we will get nod for NSE IFSC in GIFT City."
Though, CFTC nod is believed to encourage overseas investors, but Limaye said it should not come in the way of people being able to trade in the GIFT City.
Limaye said it takes time to build liquidity but the bourse is actively working with investors to encourage them to trade in GIFT City -- a financial special economic zone.
In a move to curb shifting of volumes to overseas markets after the imposition of long-term capital gains tax (LTCG), both NSE and BSE have decided to stop giving data to bourses in Singapore and Dubai.
In the offshore markets, NSE's Nifty is traded in Singapore bourse and BSEs Sensex is traded on the Dubai Gold and Commodity Exchange (DGCX).
The Nifty is the worlds largest traded derivative index in the off-shore market and a top volume generator on the Singapore Exchange (SGX) and reportedly generates 10 per cent of its volume.
In this backdrop, the Singapore bourse was planning to start its own derivative products based on publicly available settlement prices of Nifty futures contracts.
It was to migrate all existing client contracts on the SGX Nifty Futures to the new SGX India Futures from June. However, after NSE got an injunction from court, SGX got a breather in the legal fight to continue with trading otherwise it had to stop and was supposed to terminate NSE-licensed Nifty contracts latest by August 2018, when agreement between the two bourses comes to end.
"Nifty is also available at NSE IFSC and offers all benefits required for overseas investors, be it dollar denominated contracts, taxation benefits and compliance, are similar to any offshore trading destination available at GIFT City," Limaye said.
NSE is waiting for the outcome of the tussle with SGX before it takes further steps to lure overseas investors to keep offshore trading basket vibrant.
BSE also proposes to seek approval from Commodities Futures Trading Commission (CFTC) of the US to attract American investors to the GIFT City.
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