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SGX looks to avoid India's Nifty licence limits

12 February 2018

According to OCBC Investment Research, the SGX Nifty 50 Index Futures accounted for about 11.5% of SGX's derivatives volume in 2Q2018 and is the third largest in terms of volume, after the SGX FTSE China A50 Index Futures and the Japan Nikkei 225 Index Futures.

The SGX yesterday said the market for its entire India suite of products will open and operate normally today.

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Foreign bourses now offer dollar-based derivative contracts based on Indian indices, shares and other securities under licensing agreements with domestic exchanges, allowing overseas investors to gain exposure to Asia's third-largest economy without having to trade onshore.

Under SGX's licence agreement with India's National Stock Exchange (NSE), there is a six-month notice period for termination.

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That means foreign exchanges and trading platforms can no longer use the indexes and data for derivatives and they can no longer trade any existing derivatives.

SGX said it would take measures to maintain "orderly trading and clearing of SGX India equity derivatives" for its global clients. It is well suited for benchmarking, index funds and index-based derivatives. The exchanges said that this offshore trading "is not in the best interests of Indian markets".

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The NIFTY 50 covers major sectors of the Indian economy and offers investment managers exposure to the Indian market in one efficient portfolio. Foreign institutional investors sold a net $939.54 million in Indian shares over the last four sessions.

SGX looks to avoid India's Nifty licence limits