Singapore's SGX Nifty began trading as Gift Nifty from Gujarat's GIFT City here on Monday, with USD 9.4 billion open interest transferred to the new entity and USD 1.12 billion volume achieved in the first session of day-one trading.

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July 3 marked the full-scale transition of SGX Nifty to Gift Nifty, providing an opportunity for international investors to access Nifty products through NSE IX at GIFT City. A bell-ringing ceremony was organised at the GIFT City to mark the occasion as USD 9.4 billion of open interest was transferred from SGX Nifty to Gift Nifty.

"Earlier some portion of our trading had gone offshore, and now it is coming onshore in a different jurisdiction, which is GIFT International Financial Services Centre (GIFT IFSC). It is a great day and gives us a tremendous feeling of how ISFC will operate in the future," MD and CEO of the National Stock Exchange (NSE) Ashish Chauhan said.

"It marks a tectonic shift and we are in some sense achieving what we call onshoring the offshore. What was being discovered offshore is now being discovered onshore in our own market," said V Balasubramaniam, MD and CEO, NSE IX. The development will also democratise the market as many Indian participants, who are eligible under the overseas direct investment (ODI) rules of the RBI can now set up subsidiary firms in the IFSC and can participate in this trading, Balasubramaniam said.

He said the entire trading will happen in the US dollar and will be spread over 21 hours, beginning from 6:30 am and going till 2:45 am the next morning in two sessions. On the first day of full-scale transitioning, things went smoothly with a USD 1.12 billion volume of trade achieved.

The SGX Connect arrangement was negotiated by the NSE in 2020 through a collaborative agreement and was implemented on Monday. The contract is valid for five years from the date of implementation and may be extended for another two years.

"It is a revenue-sharing model. Singapore will keep 75 per cent of the business it brings, and pass on 25 per cent. NSE will keep 75 per cent of whatever is generated additionally from IFSC and India side. It is applicable at the threshold value level, which is one year average," Balasubramaniam said.

To begin with, market participants can access Gift Nifty 50, Gift Nifty Bank, Gift Nifty Financial Services and Gift Nifty IT derivative contracts on NSE IX and gradually other indices will be rolled out under the Gift Nifty suite.

Speaking on the occasion, GIFT City MD & Group CEO Tapan Ray called it a significant development as it not only fortifies GIFT City's stature as a fast-emerging global financial hub but also aligns impeccably with the visionary aspirations of Prime Minister Narendra Modi to position India at a preeminent position in international finance.

"It stands as a testimony to our unwavering commitment to onshore international financial services activities from offshore, within GIFT City's realm," he said. The extension of trading hours and the exclusive trading of US dollar-denominated Nifty derivatives on the NSE International Exchange will attract discerning global investors while propelling economic growth at an accelerated pace.

By facilitating seamless access to global markets and fostering a culture of innovation, this momentous development will undeniably catalyse India's emergence as a vibrant financial powerhouse, Ray said. These contracts are accessible for almost 21 hours, which overlaps Asia, Europe, and US trading hours. Gift Nifty offers a single pool of liquidity and venue to access USD-denominated Nifty derivatives at NSE IX under the regulatory framework of the International Financial Services Center Authority (IFSCA).

"The complete migration of the re-branded GIFT-Nifty to GIFT IFSC will consolidate the international liquidity pool for Nifty products in the NSE IX exchange and will give a boost to GIFT-IFSC as a global hub for international financial products and services," Injeti Srinivas, Chairman, IFSCA, said.

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