International investors will continue to trade through Singapore Exchange in Nifty as the $7 billion open interest contract will be relaunched on GIFT City from July 3, 2023, following 22 years of success in Singapore.
This collaboration is significant given it is the first cross-border initiative in connecting India and Singapore's capital markets.
"SGX Group will continue to provide international access to USD-denominated Nifty contracts, which has been re-christened GIFT Nifty starting July 3, 2023, alongside other SGX derivatives products," Janice Kan, managing director of head of markets equities at SGX Group, told PTI on Friday.
Investors will trade and clear the Nifty contracts through SGX and orders will be routed via the Connect to NSE IX for trade matching, and executed trades will be cleared and settled on SGX.
Kan has seen through the development of the Nifty derivatives, as investors' interest in the Indian equity markets grew over time.
Operating in an AAA-rated global financial center as well as a neutral trading and clearing venue, SGX is well placed to help internationalise the Nifty brand when the index was incepted by NSE in 1996. NSE and SGX inked a partnership and the USD-denominated Nifty futures were launched on SGX in September 2000.
Today, it accounts for 52% of the offshore open interest in Indian equity indices, ahead of all other Indian equity indexes. "This speaks volumes of the demand and interest in the Nifty contracts and the international branding that SGX has built for the domestic India benchmark," Kan added.
Further, Kan said the transition of the Nifty trade matching to a single liquidity pool in Ahmedabad aims to build a larger unified market, creating a deeper liquidity pool with participation from both India and global investors.
"We are enlarging the ecosystem through the GIFT Connect," she underlined. "The market has the potential to increase manifolds."
The GIFT Connect is fully supported by the government and regulatory authorities in India and Singapore.
It has taken four years from conceptualization to achieving full-scale operations on July 3, 2023, Kan said.
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