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.