SGX says it'll continue with trading in Indian indices

INDIA-ECONOMY-BUDGET

The country has a valuable equity market that represents about 14% of its gross domestic product (GDP), thanks to its leading stock exchanges' the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE).

Singapore Exchange Ltd. stock fell the most since November 2008 in early trading Monday as investors reacted to the National Stock Exchange of India Ltd.'s move to end its licensing pact with the Lion City bourse.

SGX offers the hugely popular Nifty contracts that attract many global investors due to its low trading costs and also the attractive tax regime of the country. But it could jeopardize India's standing with worldwide investors and prompt index compilers such as MSCI Inc.to reconsider the nation's weighting in global benchmarks, said Johan Sulaeman, research director at the Center for Asset Management Research & Investments at the National University of Singapore's Business School.

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.

Offshore Hub Singapore has become a hub of offshore trading for many markets, including China, Japan and Indonesia.

The threat was exacerbated when the SGX said in January that it would start offering single stock futures benchmarked to Nifty 50 companies starting Feb 5.

DBS Equity Research added that the products also comprised 9% of SGX's derivatives revenues and about 4% of total company revenue in the first half of 2018. NSE officials had sought a delay of those products, people familiar with the matter said last month.

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"Probably as individual stock futures were being introduced on SGX, the Indian side became paranoid and hence this knee-jerk reaction", said A.S. Thiyaga Rajan, a senior managing director at Aquarius Investment Advisors Pte in Singapore.

The SGX plans to increase its offer of this single stock futures contract of Indian top range listed companies hence on, responding to global market demand for trading in Indian companies' stocks and shares.? The exchange declined to comment.

According to Indian news site Livemint, the Indian exchanges, the Securities and Exchange Board of India and the finance ministry had been discussing possible curbs since January over concerns that foreign exchanges are becoming price setters for Indian securities.

"We are not being protectionist", he said in a phone interview. India Steel Works Limited has relatively good liquidity.

SGX and NSE signed a licensing agreement in March 2000 that allows futures and options based on the Nifty 50 Index to trade in Singapore.

SGX said that it will take all measures to maintain orderly trading and clearing of SGX India equity derivatives for its global client's and that its licence agreement with NSE will ensure the continuity of listing and trading of the Nifty derivative products at least till August 2018.

SGX isn't the only overseas exchange affected by Friday's move. Also, without a license the products provided by these worldwide exchanges and platform will become illegal and sophisticated investors will not invest in these products.

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