SGX seeks feedback on proposed rule changes regarding GIFT Connect

THE Singapore Exchange (SGX) is seeking market feedback on proposed amendments to its derivatives clearing rules and the SGX Derivatives Trading (SGX-DT) futures trading rules.

This consultation is in relation to the "GIFT Connect" trading link with India's National Stock Exchange, under which Nifty futures contracts on the SGX are executed in India's special economic zone, the Gujarat International Finance Tec-City, or GIFT.

The trading link is also known as the National Stock Exchange International Financial Service Centre (IFSC)-SGX Connect.

In a Thursday statement, SGX said that it has incorporated a special-purpose vehicle, SGX India Connect IFSC Private Limited, which will be admitted as a trading member of the National Stock Exchange IFSC. The special-purpose vehicle will also be a clearing member of National Stock Exchange IFSC Clearing Corporation Limited (NICCL).

Orders for Nifty products from SGX-DT trading members will be routed via the special-purpose vehicle to the National Stock Exchange IFSC for trading and execution, followed by clearing and settlement through NICCL. SGX's derivatives clearing members will face the bourse's unit, SGX Derivatives Clearing (SGX-DC), as the central counter-party for these trades. This is similar to the arrangement for other SGX-DT products.

The proposed amendments to the SGX-DC clearing rules include the introduction of an additional layer of financial resources over and above the SGX-DC Clearing Fund, as well as new default-management tools.

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The proposed amendments to the SGX-DT futures trading rules are intended to clarify the obligations of SGX-DT trading members when accessing GIFT Connect to trade relevant Nifty derivatives contracts, the bourse said.

The consultation will be open till July 7. Shares of SGX closed at S$10.43 on Thursday, down 0.38 per cent.