SGX to launch Nifty index successor before shut down

SGX will launch successor products following shut down of Nifty index and termination of data contract with the NSE in India.

Singapore Exchange (SGX) has confirmed it will list successor products to the Nifty family of products before its contract with the National Stock Exchange of India (NSE) expires in August.

The exchange operator said the move will allow market participants to continue investing and maintaining risk exposure to Indian capital markets, while transitioning to the new products before the license agreement with NSE is terminated.

SGX added it is currently working with NSE to develop a link allowing international market participants to trade on NSE’s International Exchange, while managing their clearing exposures through SGX.

“As a market operator, we have an obligation to our international clients to provide them with solutions to manage their risks,” said Michael Syn, head of derivatives at SGX

“Our successor products will provide certainty and continuity for our clients. At the same time, we continue to work with NSE to create a larger pool of liquidity comprising international and home market participants.”

The future of the Nifty futures index was thrown into doubt earlier this month after three major Indian exchanges said they will stop licensing their market data and indices to foreign investors.

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

“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 a joint statement.

The move raised serious concerns amongst derivatives market participants globally due to a potential sudden disruption to trading activity. 

SGX responded after its shares plummeted 7% following the announcement and said it would develop a new India-access risk management service for global participants to execute within the SGX India equity index family of derivative products.

The SGX Nifty service will continue to list, trade and clear transactions uninterrupted until August.