The stock exchanges of singapore and india have ended a long-running battle over derivatives and agreed to launch a trading link across the two markets, marking a substantial improvement in relations between the asian bourses.
Singapore exchange said it had agreed with the national stock exchange of india to push ahead with a market connect platform, and that both sides would withdraw from arbitration proceedings over the trading of indian equity derivatives in the south-east asian city-state.
Sgx had been the main overseas provider of derivatives for india stocks prior to the bourses falling out in 2018, when indian exchanges announced they would stop providing data to foreign index providers.
At the time, indian bourses including nse said the popularity of derivatives in singapore that are used to hedge exposure to the south asian countrys equities had resulted in migration of liquidity from india, which is not in the best interests of indian markets.
Sgx and nse said on wednesday that they had received regulatory approvals for a proposed scheme to allow trading of sgxs nse nifty 50 index futures and options from gift, a financial centre in the indian state of gujarat. the exchanges did not provide a launch date for the platform.
Loh boon chye, chief executive at sgx, said the link between singaporean and indian markets would facilitate unfettered access for global market participants, and in turn enhance investments and capital market flows between india and the world.
The move to strengthen ties with nse comes as sgx faces pressure to compete with hong kong.
Hong kong exchanges and clearing, which operates the citys stock market, in may snatched sgxs derivatives licensing agreements with index provider msci. the hong kong bourse also plans to offer trading of futures contracts for chinese onshore shares similar to those already offered in singapore.
Hong kong will soon play host to part of the initial public offering of chinese payments platform ant group set to be one of the worlds largest ever equity raisings.
With this agreement sorted out it could be a positive point for singapore and could definitely mitigate our current losses in terms of competitiveness to [hong kong], said kelvin wong, a market analyst at cmc.
Singapores exchange is seeking to build a more balanced platform after years of delistings and low trading volumes squeezed its core equity listings business.
As part of its diversification efforts, sgx has launched a derivatives platform with ftse international tracking taiwans stock market and plans to expand its presence in global foreign exchange.
In july sgx acquired the remaining stake in bidfx, a trading venue used by hedge funds and banks, for $128m.