A new derivatives trading and clearing link between Singapore and India will be ramped up to reach full scale by second quarter next year.
The NSE IFSC-SGX Connect was formally launched on July 29 by India’s Prime Minister Narendra Modi and other officials.
Since then, both SGX and the National Stock Exchange of India (NSE) have been working with the technology partner, TCS, and various SGX members to transition the trading of Nifty contracts to the NSE IFSC.
The Connect enables orders from SGX members to be routed to NSE IFSC for trading and execution with clearing and settlement through SGX Derivatives Clearing.
An enhanced Connect infrastructure to support full scale Nifty trading via the Connect is expected to be delivered by TCS in early 2023.
To date, 14 SGX Clearing Members have been onboarded and work will continue to onboard the remaining members progressively. SGX Group and NSE will engage the trading community to ensure a smooth transition.
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SGX Group CEO Loh Boon Chye, CEO of SGX Group acknowledges that "immense efforts" from all parties involved, including the authorities the Monetary Authority of Singapore and the International Financial Services Centres Authority (IFSCA), in getting the Connect fully operational by next year.
"This will be a landmark occasion and we look forward to creating greater connectivity for investors globally and forging closer relationships with our partners in India," adds Loh.
Ashishkumar Chauhan, MD and CEO of NSE calls the Connect "a key milestone" in NSE's partnership of more than 22 years with SGX.
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"We shall collaborate with SGX Group and their members to ensure a smooth and seamless transition to NSE IFSC," he adds.
Back in 2018, India’s stock exchanges indicated their intention to halt the licensing of their indexes to foreign exchanges.
Besides concerns that trading activity was being channelled away, there were worries that the trades of derivatives at SGX, which has an earlier trading hour, had swayed the market’s direction when India’s exchanges start the day a few hours later.
Both parties agreed to the new joint venture framework in 2020 and the NSE IFSC-SGX Connect is the result.
