“In view of the uncertainty caused by IISL’s action, and after consultation with key stakeholders, we have decided to continue listing SGX Nifty contracts until August 2018, as contractually provided for under our licence agreement with IISL. This will enable our clients to manage their portfolio risks without interruption. We will reschedule the launch of our new India derivatives products, pending the outcome of the arbitration,” said SGX in a statement on Tuesday.
“SGX will contest the interim injunction and reserves all rights in respect of damages caused by IISL’s action,” it further said.
In February, domestic exchanges announced the termination of data feed and licensing agreements with their global counterparts in order to put an end to offshore trading in Indian products. The move put NSE and SGX at loggerheads, as India products accounted for a sizeable volume on the overseas bourse. The Nifty index contributes nearly 10 per cent to SGX’s equity derivatives revenue.
SGX has maintained that investors largely trade on Nifty products on its platform for hedging their underlying India exposure. The new India products were to allow international portfolio investors maintain their exposure, SGX had said while announcing the new products.
“IISL’s action has adversely affected international investors who rely on SGX’s platform to manage the risks of their exposures to the Indian market, and significantly diminishes access to, and interest in the capital markets
in India. SGX remains open to a collaborative long-term solution that will benefit Indian markets,” the Singapore bourse said.
Trading volumes of Indian derivatives contracts on SGX have dropped 25 per cent between February and April.
February 9: Indian exchanges end data sharing tie-ups with their foreign counterparts; Agreements to end in August
February 12: Shares of SGX tumble as analysts see pressure on earnings
April 11: SGX announces new India products; Says will migrate client positions to new products in June
May 21: NSE moves Bombay HC to stop SGX from launching new India products
May 22: Court grants interim injunction against the launch of new India products
May 29: SGX says continue listing SGX Nifty contracts until August 2018
Monetary Authority of Singapore (MAS) raised concerns over the dispute between the NSE and SGX, terming it disruptive to investors. “The commercial dispute… is disruptive for international institutional investors in Indian equities. The range of available financial instruments for investors to hedge exposures and manage risks in Indian equities will be reduced. A prolonged dispute will impact the accessibility of the Indian equities market to international investors,” said an MAS spokesperson. The central bank urged all parties to find an amicable solution. “A speedy resolution to the dispute will be in the best interest of all parties concerned,” it said.