Context: The popular SGX Nifty is rebranded as GIFT NIFTY and all the derivative contracts worth $7.5 billion, earlier traded in Singapore, will shift to India.

Background

• Nifty or Nifty50 is a famous index comprising the top 50 listed Indian companies that trade on the National Stock Exchange (NSE). 

• SGX Nifty is a derivative contract traded on the Singapore Stock Exchange based on Nifty 50 Index. 

• As trade in Nifty 50 futures on the NSE, foreign investors trade on SGX Nifty at the Singapore stock exchange in dollar terms.

About GIFT NIFTY

• It is the first of its kind trading link, with trading and matching in India and clearing and settlement in Singapore.

• On June 30, trading on SGX NIFTY ceased in Singapore and the entire trading volume and liquidity fully switched to GIFT IFSC. Therefore, it was rechristened GIFT Nifty. 

Products offered under GIFT Nifty

• GIFT Nifty 50

• GIFT Nifty Bank

• GIFT Nifty Financial Services

• GIFT Nifty IT derivatives contract.

Significance

• This is for the first time, India will get an international contract which was earlier exported out of India.

• It will help Indian markets to increase their reach among global investors, especially those who are not directly engaged with Indian capital markets.

Deal between SGX and NSE

• Revenue sharing: The five-year contract establishes a 50:50 revenue-sharing arrangement between Singapore Exchange (SGX) and NSE International Exchange (NSE IX).

• Initial revenue split: For Singapore-generated business, SGX will receive 75% of the revenue, while NSE will receive the remaining 25%.

• IFSC business: NSE will retain 75% of the International Financial Service Centre (IFSC) business, with the remaining 25% going to SGX.

• Future volume-based sharing: Once a “threshold volume” is reached, the revenue sharing will be equally split between both entities.

About GIFT City

• GIFT (Gujarat International Finance Tec-City) City is located in Gandhinagar, Gujarat.

• It consists of a multi-service Special Economic Zone (SEZ), which houses India’s first International Financial Services Centre (IFSC) and an exclusive Domestic Tariff Area (DTA).

• GIFT City is envisaged as an integrated hub for financial and technology services not just for India but for the world.