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SGX and India's National Stock Exchange drop arbitration, agree to work on trading link

THE Singapore Exchange (SGX) and India's National Stock Exchange (NSE) have inked a formal agreement over their planned new trading model for Nifty futures contracts, the two parties said in a joint statement on Tuesday.

They have now agreed to work out key terms for the NSE International Financial Service Centre (IFSC)-SGX Connect, which will see Nifty futures contracts on the SGX executed in the Gujarat International Finance Tec-City (Gift City). Both sides have noted that statutory regulators, which agreed to the proposed model last year, recently doled out fresh clarifications on how the Connect will be rolled out.

The exchanges, which had earlier aimed to have trades up and running by the end of this year, said they "will continue to work with key stakeholders to develop the infrastructure for the Connect and ensure member readiness prior to its implementation".

"SGX will work with NSE and stakeholders to develop a connectivity infrastructure that incorporates international best practices and creates new value for existing and new customers," said SGX chief executive Loh Boon Chye in the statement.

Putting to rest a legal dispute that has stretched on since the offshore trading saga began, the two bourse operators have also withdrawn arbitration proceedings.

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India's main stock exchanges decided in early 2018 to stop licensing their securities or sharing data with foreign exchanges, dealing a shock blow to products such as the SGX's popular Nifty 50 index futures contracts.

The Gujarat tie-up was then raised as an alternative link, under which Nifty trade orders from Singapore will be routed through an SGX special-purpose vehicle in Gift City - a tax-exempt off-shore destination in India.

The plan is for the NSE IFSC-SGX Connect to create a bigger liquidity pool for Nifty products.

NSE chief executive and managing director Vikram Limaye said the Connect "will broaden the international and domestic participant base and further strengthen the capital market ecosystem in Gift City, resulting in more broad-based development across asset classes and capital-raising activity".

SGX shares closed flat at S$8.90 on a cum-dividend basis before the latest update.

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