An age old practice of referring to the Singapore Stock Exchange or SGX Nifty to gauge the opening cues for Indian equities will change starting today as it will be rebranded as GIFT Nifty. All derivative contracts worth $7.5 billion, which were earlier traded in Singapore, will shift to India's GIFT City.

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The rebranding exercise will take place under a formal agreement between the NSE International Financial Services Centre, a wholly-owned subsidiary of NSE and the Singapore Stock Exchange.

Starting today, the GIFT Nifty will have two sessions of trading. The first one will start at 6:30 AM Indian Standard Time (IST), and continue till 3:40 PM IST. The second session will begin from 5 PM IST and continue till 2:45 AM IST.

Contracts of GIFT Nifty 50, GIFT Nifty Bank, GIFT Nifty Financial Services and GIFT Nifty IT will be available for trading starting today.

A whole host of changes will accompany this rebranding exercise. Here are some of them:

First, all trades on the SGX Nifty which were placed in Singapore, will transition to the GIFT Nifty.

The matching of these trades, the settlement, will also happen at the NSE International FInancial Services Centre in GIFT City of Gandhinagar, Gujarat, under a Special Purpose Vehicle (SPV) called SGX India Connect IFSC or SGX ICI.

The SGX ICI will route the orders of SGX members on Nifty 50 contracts to NSE IFSC for trade matching. The executed trades will be cleared on NSE IFSC clearing corporation or NICCL and by SGX-DC simultaneously as the central counterparty for SGX clearing members.

As of June 2023, here's the list of clearing members:

Both Singapore, through its SPV, and NSE, through its GIFT City, will bring their respective members. Revenue sharing will be 75:25 in favour of NSE and SGX for the respective members they bring. There will be different tariff rates for proprietary traders and client traders. For the former, the exchange will earn $0.40 per trade, while on client traders, the exchange will earn $1.

In an interaction with CNBC-TV18, NSE International Exchange MD & CEO V Balasubramaniam said that going forward, they may look at expanding the partnership with SGX and also look at bringing more partners to offer more products for trading beyond the initial four.

Balasubramaniam further said that the GIFT Nifty is expected to have daily volumes worth $1.5 billion to $2 billion.

Will you, the Indian retail trader be allowed to trade the GIFT Nifty contracts?

Unfortunately, the GIFT Nifty will remain out of reach for Indian retail traders under the Liberalised Remittance Scheme (LRS) route. Under the LRS, the Reserve Bank of India (RBI) disallows the use of the $2,50,000 per person, per year limit for leveraged traders, including futures and options.

However, Indian brokers and subsidiaries can sign up funds through non-residents and family-owned offices of wealthy Indians as clients. Apart from running proprietary trades, they can trade on behalf of clients as well.

Goodbye SGX Nifty and welcome to GIFT Nifty!

(Edited by : Hormaz Fatakia)

First Published:Jul 3, 2023 5:14 AM IST