ANALYSIS: Indian exchange to open bridge for international traders

Speaking at the FOW Trading India conference on Wednesday, the head of Business and Product Development at NSE IX, the Gift City-based arm of India’s National Stock Exchange (NSE), said the group is in the final stages of creating a broker-like entity in the international centre.

Meet Pandya told the conference: “NSE International Exchange is setting up global access under the subsidiary on NSE India to give access to institutional clients who want to trade from B3 to Australian markets to whatever that may be for proprietary professional traders and also for Indian retail investors looking to tap into the underlying equity markets from Australia to the US. We would be giving them access. Give us another two months’ time max and you will be able to plug and play through our global ecosystem.

"That is what Gift has enabled, the NSE International Exchange will have a separate entity which will be like a broking arm and that will give access. Earlier people were setting up offices in Dubai or Singapore to trade London or the US, but we’ve already got four large firms who were previously exporting talent which have set up offices [in Gift City].”

The new business could significantly cut the cost of Indian firms trading internationally because, as Pandya says, they were previously required by law to set up entities outside of India to trade international products.

Speaking more generally about the progress made by Gift City, India’s business-friendly, onshore equivalent of Dubai or Singapore, Pandya said the hub is attracting new participants.

He told the delegation: “In terms of participants, it initially started with institutional clients from India who wanted to set up entities but that has evolved over the last year-and-a-half so now we have large hedge funds and asset managers setting up in Gift IFSC. The participant set has now moved from prop trading firms to hedge funds and institutional clients.”

Russell Beattie, managing director, Asia-Pacific at CME Group, told the conference Gift City’s endeavours are consistent with other similar initiatives in Asia.

“These economic freezones are starting develop and that’s because these domestic ecosystems are trying to get controlled access to international markets.”

Beattie told the panel which included Rama Pillai, managing director, Global Sales and Origination at SGX Group: “We’re having some interesting discussions around how we can look to potentially develop Gift City as the ecosystem to access international markets and also facilitate inbound activity, which SGX is already doing.

“As Gift City continues to develop and gain traction, looking at potential trading connectivities is something we are likely to explore.”

Beattie concluded: “That’s outbound activity for qualified investors through Gift City to international markets and equally, potentially looking at opportunities for inbound to give international clients access to potential product listings in Gift City.”

Pillai, whose SGX partners with NSE IX by enabling its members to trade directly on the Indian market, added: “We have brought the product back into Gift City where it is now listed on the NSE IX platform so since September 2023 we are a conduit to bring international flow that was trading on SGX in the past.”

Singapore Exchange was previously the home to trading of futures on the main Indian Nifty index but this changed when SGX struck the partnership with NSE IX.

Pillai added: “What I see in Gift City, I’m very heartened. We are a big investor, we are physically there, we want it to succeed and we want more participation to build up in Gift City.”

Earlier at the FOW conference, the chief general manager of the main Indian futures regulator committed to balancing the often-competing requirements of market fairness and innovation by regulated firms.