A division of India’s National Stock Exchange and Singapore Exchange (SGX) have announced they are to introduce futures on Indian sector-specific index futures on SGX.
This is the first time that derivatives on Indian sector indices are being launched outside India.
SGX will list four USD-denominated index futures contracts based on IISL’s sector indices, specifically the SGX Nifty Bank Index Futures, SGX Nifty IT Index Futures, SGX Nifty CPSE Index Futures and SGX Nifty Midcap 50 Index Futures.
The SGX Nifty IT Index Futures and SGX CPSE Index Futures will launch on 29 March 2016, followed by the SGX Nifty Bank Index Futures and SGX Nifty Midcap 50 Index Futures in mid- 2016.
The introduction of sector index futures contracts will expand SGX’s available Indian products.
Chitra Ramkrishna, managing director and chief executive officer of NSE, said the news fits with the continued participation of foreign portfolio investors in India.
She added: “India’s economic growth, unique demographic profile, foreign direct investments and government initiatives are helping to drive the banking and IT sectors, as well as supporting the growth of the public sector and mid-cap companies.
“Derivatives on these new sector indices will provide useful tools for offshore investors to benefit from these trends and also to manage market movement.”
SGX’s flagship Indian equity derivative product, the SGX Nifty 50 Index Futures, is based on IISL’s primary Indian equity benchmark Nifty 50 Index and is widely used by international market participants to gain offshore exposure to the performance of the Indian equity market.
Loh Boon Chye, chief executive officer of SGX, added, “The continued success of our existing India-linked risk management products is testament to offshore demand from investors to access the India opportunity as well as SGX’s ability to pioneer offshore derivative contracts.”