SGX faces interim injunction on its new India equity derivative products; counter falls

THE Singapore Exchange (SGX) said on Tuesday that it had been notified by the National Stock Exchange of India (NSE) of an application made in the Bombay High Court for an interim injunction on its new India equity derivative products.

SGX shares fell 2.09 per cent to S$7.48 as at 10.20am after a trading halt was lifted at 10.15am.

It had earlier announced plans to list the new derivative products in June.

The products were intended to replace SGX's popular Nifty 50 index futures, following a decision by India's stock exchanges in February to stop supporting offshore derivatives linked to their benchmark indices so as to prevent trading volumes from moving overseas.

Unlike its Nifty family of products, the SGX said the new products are not tied to the Nifty licence agreement with the NSE, which will be terminated around August.

In a statement on Tuesday, the SGX said it had full confidence in its legal position and would vigorously defend its action.

It added that its new India derivative products have received the relevant regulatory approvals and will list in June so that SGX clients can seamlessly transition their India risk management exposures.

Michael Syn, head of derivatives at the SGX, said in a statement: "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.

"We have, from the onset, expressed to NSE that there is a need to maintain liquidity in the international India equity derivatives market... We remain open to working with NSE and other relevant stakeholders to develop a solution that meets the risk management needs of global market participants."

The Indian media had reported earlier this year that concerted efforts by the Indian exchanges to eventually halt the trading of offshore derivatives tied to India's benchmark indices such as the Nifty 50 are meant to address concerns that foreign exchanges were becoming price-setters for Indian securities.