Here’s an interesting development. Indian exchanges (NSE, BSE, MSEI) have decided to terminate data licensing agreements of Indian indices and securities to any foreign exchanges or platforms. This means it’s the end of the road for Singapore Nifty which had become sort of leading indicator how the Indian markets would open.
All the 3 exchanges - NSE, BSE and MSE collectively put out a press release which said they are taking this decision because
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 fears of NSE are justified given the fact that Nifty Futures which is the most active contract on SGX clocks a daily turnover of $1 billion. FPIs account for a lions share of this trading with some officials putting that number at over 70%. This means that all these volumes will now migrate to the Indian bourses.
This move also means that any Indian derivatives instrument trading on any global exchange will now cease. Here is the link to the press release. This move also sounds the death knell for single-stock futures which the Singapore Stock Exchange just started offering last week.
The exception to this move is products and indices traded through the International Financial Services Centre (IFSC). The recent move by the govt to do away with STCG on derivates traded through Gift City will make it attractive for FIIs to trade through IFSC.
Never doubt the human ingenuity. Singapore is low tax, business friendly, hassle free place for business. Nothing wrong in FIIs opting for such a place. U know just compare the easy doing business between India and Singapore
Now who can stop SGX buying data feed from third party providers or offering a CFD on delayed quote. Even now SGX nifty is traded even while NSE is closed for the day.
Nope, that path has also been closed. The press releases says
Either directly or through their subsidiaries/group entities or through third party data vendors, shall not license/provide Market Data including prices of securities traded on the Exchange’s platform.
Great… Typical Indian style … if i cant improve, i will never let my neighbour have fun. (U SEE THIS EVERY DAY IN OUR GREAT TRAFFIC SYSTEM & MANAGEMENT )
But u know, many Indian style methods that were invented to protect inefficiency, corruption and cronyism had to give way to market economy. Free enterprise.
Licence raj, Fixed exchange rates, centrally planned economy are some of them
I guess this will help bring more volume back to India and this will help better price discovery.
My another theory is that besides bringing more volume back to India, this will help promote GIFT city.
It is because of this protective style that India (and the Indian markets) have been surviving.
If it had not been for such protection, we would have been held hostage, like many Asian countries who allowed foreigners to take control (indirectly):
FIIs/Hedge funds can easily opt for OTC-options with investment banks for hedging (Just like any other CDS, OTC options) rather than trading here in India and increase cost of hedging by paying hell of a taxes, charges and fees.
i absolutely love the way the guy driving in front me protects his turf by driving in the middle of two lanes (actually in middle of several lanes) I cant go past him, coz i totally amused with his protection skills. u know
Hope you get the point. The traffic example, though hilarious, is not really related to this issue, as driving is a bit of open competition on an open public road.
Here, its about my market, my turf and others reaping the benefits from it. Should I continue to allow them, or should I stop them?
I have a question? Can you live for an hour without an American invention, say electricity, Computer, telephone, smart phone, Internet, automobile, petrochemicals etc. Why did they allow everyone to use their “turf”.
At last Exchanges opened their eyes, it seems that , the Govt intention of promoting GIFT City is gathering movements. this move will help to look inside then , looking out side ( like Chinese are doing ) as the Indian mentality is that , whatever be the Indian is not good , This move will change the dynamics of Indian stock market
It is scary to see India becoming more protectionist and anti-free market. Looks like we are headed back to the licence raj regime.
On a related note, I believe this move can only result in Index futures being stopped. For single stock futures, there are no licencing requirements. Closing stock price data is only required for arriving at the final monthly stock futures settlement price. This data can be obtained by SGX from multiple free sources; business newspapers, news channels, websites etc.
Yes, but Limaye has said that it’s a contract and contracts can be terminated, so it could be lesser than 6 months if they decide so in lieu of some compensation or whatever they had signed in the previous contract.
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