SGX flagship futures in doubt after Indian exchange market data suspension

India’s largest exchange operators will stop licensing index market to foreign exchanges as derivatives volumes migrate from the country.

Three major Indian exchanges have said they will stop licensing their market data and indices to foreign investors, bringing the Singapore Exchange’s (SGX) flagship futures index into question.

The National Stock Exchange (NSE), Metropolitan Stock Exchange of India (MSEI) and BSE said in a joint statement the data products licensed to foreign exchanges has led to a migration of derivatives trading from the country.

SGX saw its shares plummet 7% at the time of print, following the news as the move casts doubt on one of its most traded futures contact, the SGX Nifty.

The exchange assured market participants in a statement that the license with NSE will ensure continuity of listing and trading of its Nifty products until at least August.

“SGX will develop and launch new India-access risk management solutions to allow global participants in SGX India equity index family of derivative products, to execute their investment activities with continuity,” SGX added. 

Some of the licensing agreements have been terminated with immediate effect raising alarms that trading on other exchanges could be disrupted.

“For various reasons the volumes in derivative trading based on Indian securities including indices have reached large proportions in some of the foreign jurisdictions, resulting in migration of liquidity from India, which is not in the best interest of Indian markets,” the exchanges said in the joint statement.

The Futures Industry Association (FIA), which represents derivatives trading firms globally, said the move has raised “serious concerns” for its members due to the possible sudden disruption of trading activity.

“We believe that accessible markets are essential for the optimal growth and development of liquidity and allow customers to hedge their risks and manage their exposures in the most efficient way possible,” FIA said.