The country's largest bourse National Stock Exchange has moved the Bombay High Court as it looks to stop Singapore Exchange (SGX) from launching its India equity derivative products. However, SGX, which has already received required regulatory approvals for the products, says it will go ahead and launch them next month.
"SGX has been notified by the NSE of an application made in the Bombay High Court for an interim injunction on our new products. Our new India derivative products, which have received the relevant regulatory approvals, will list in June 2018 and allow our clients to seamlessly transition their India risk management exposures," the Singapore exchange said on Tuesday.
In February 2018, India's three stock exchanges—BSE, NSE and Metropolitan Stock Exchange—had jointly announced that they would cancel licensing agreements with overseas exchanges for providing indexes or securities-related data in the wake of a surge in trading in India equity-linked derivative products on overseas exchanges. The SGX Nifty 50 index futures, offered by SGX through a licensing pact with NSE, was among the most popular of the products.
The move would prevent SGX and other overseas exchanges from continuing with such products, and foreign investors would then have to buy into the derivative products offered by Indian exchanges domestically. However, SGX went ahead and announced in April that it would list new India equity derivative products in June.
The exchange reiterated those plans, despite NSE moving the court to restrain it from doing so.
"SGX has a responsibility to provide risk management tools for our global clients and ensure there is no disruption to the marketplace. Our new India equity derivative products are essential to enable institutional investors to maintain their current portfolio risk exposure to the Indian capital markets," said Michael Syn, Head of Derivatives, SGX.
India has been looking for long to increase volumes at the Gujarat International Finance Tec-City (GIFT), where Indian exchanges have launched various equity-linked derivative products.
SGX said there was a need to maintain liquidity in the international India equity derivatives market to connect international participants with GIFT. Syn said the exchange remained open to working with NSE and other stakeholders to develop solutions that would meet risk management needs of global market participants.