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SGX to list new Indian derivatives in June; exploring Gujarat tie-up with NSE

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THE SINGAPORE Exchange (SGX) will list new derivative products tied to Indian equities in June 2018, the bourse operator said on Wednesday morning.

These new products are intended to replace SGX's Nifty futures, which face an uncertain future after August in the wake of the decision by India's stock exchanges to stop supporting offshore derivatives linked to their benchmark indices.

The new derivatives - which are not tied to the Nifty licence agreement with the National Stock Exchange of India (NSE) - will "provide market participants with continuity and the ability to seamlessly transition their current India risk management exposures", SGX said.

They will also add to the available single-stock futures offerings linked to Indian counters, which were launched on the Singapore market on Feb 5.

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Separately, SGX added that it is still working with its Indian counterpart, the NSE, to evaluate a joint trading and clearing model in Gujarat International Finance Tec-City (GIFT City).

"While implementation is not feasible before the expiry of the licence agreement with NSE, SGX remains committed to engagements with NSE and other relevant stakeholders in India towards a collaboration in GIFT City," the Singapore operator said.

Indian bourses announced in mid-February that they would stop sharing data feeds to support offshore contracts, amid concerns that those offshore contracts were draining liquidity from onshore markets.

For SGX, which offers futures linked to the Nifty 50 index, the decision seemed to sound the death knell for one of its most popular equity index contracts. A six-month termination notice period under SGX's licensing deal with NSE gave it until August to find a solution.

GIFT City, a global hub in the western state of Gujarat, has been floated as a potential host for alternative products, as indices trading there would be exempt from the new restrictions.

Head of derivatives Michael Syn said in a statement that the SGX "has worked hard over the past two decades to promote the development and internationalisation of India's capital markets".

"We are still exploring a solution that would bring the liquid international market directly into (Gujarat International Finance Tec-City), in a way that meets our clients' regulatory requirements while growing the overall market," he said.

"In the meantime, we will continue with our new India equity derivative products, which international portfolio investors need to maintain exposure to India."