GIFT NIFTY – ECONOMY
News: What
is GIFT NIFTY, which started trading from July 3?
What's in the news?
● Rechristened
GIFT NIFTY, the popular Singapore Exchange (SGX) NIFTY started trading from GIFT
City in Gujarat, executing over 30,000 trades in a single session.
Key takeaways:
● This
is the first cross-border initiative in
connecting India and Singapore’s capital markets.
● Though
the SGX is expected to corner the bulk of the business initially, NSE
International Exchange (NSE IX) expects to make inroads gradually.
Deal between SGX and NSE:
● According
to a five-year contract between the two, business will largely be shared on a 50:50 basis.
● Initially,
for the business generated by Singapore, SGX will get 75 percent of the
revenue, while NSE will get the remaining 25 percent.
● For
any business generated by the International Financial Service Centre (IFSC) —
which is currently very little in volume — NSE will keep 75 percent of the
business.
○ Once
a “threshold volume” is touched, sharing will be on a 50:50 basis for both the
entities.
● NSE IX will not be able
to enter into similar arrangements with any other exchange.
● This
contract can be extended for an additional two years after the five-year period
concludes.
First trading session of GIFT NIFTY:
● In
the first trading session for GIFT NIFTY held, 90 percent of the 30,000-odd
trade volumes executed were through the SGX.
● NSE
IX expects that international investors will gradually come directly to IFSC
instead of routing through SGX.
GIFT NIFTY:
● On
June 30, 2023 - the trading on SGX NIFTY ceased in Singapore and the entire
trading volume and liquidity fully switched to GIFT IFSC. Therefore, it was
rechristened GIFT Nifty.
Products offered by GIFT NIFTY:
● Currently,
four products are being offered
under the umbrella brand of GIFT Nifty — GIFT Nifty 50, GIFT Nifty Bank, GIFT
Nifty Financial Services and GIFT Nifty IT derivatives contract.
Significance:
● GIFT
Nifty is an important milestone for GIFT IFSC and its outreach towards foreign investors and enhancing the capital market
ecosystem in GIFT City.