In a significant development, the $7.5 billion derivative trade that was previously taking place on the Singapore Exchange has now shifted to the NSE International Exchange (NSE IX) in Gujarat’s Gandhinagar. As of July 3, the SGX Nifty futures contracts have been rebranded as Gift Nifty.
Relocation of SGX Nifty to India as Gift Nifty Sparks Enthusiasm and Sets Morning Prices
For a long time, SGX Nifty has served as an early indicator of how the Nifty is expected to open on a given day. It has been the go-to reference for traders before the Nifty officially begins trading at 9:15 am.
The relocation of the trade to India has garnered much enthusiasm among market participants. NSE MD and CEO Ashish Chauhan expressed that this shift is expected to determine the prices in the morning for India. Previously, there were concerns about placing orders in Singapore, but now, with the matching taking place in GIFT City, Gandhinagar, it has become a reality and is seen as something magical.
So, what is Gift Nifty? Essentially, Gift Nifty is the new name given to the SGX Nifty, as all the open positions previously held on the SGX have now been transferred to the NSE IX. Going forward, the US dollar-denominated contracts of Nifty futures will be traded on the NSE IX located in GIFT City SEZ, operating under the regulatory framework of the International Financial Services Center Authority (IFSCA).
With this shift, the trading of SGX Nifty has been suspended and it will eventually be delisted from the Singapore Exchange. As for the trading timings of Gift Nifty, it will be accessible for nearly 21 hours, overlapping with the trading hours of Asia, Europe, and the US. The trading sessions are divided into two: the first session runs from 6:30 am to 3:40 pm, and the second session runs from 4:35 pm to 2:45 am.
Tax Benefits and Expanded Offerings: NSE IX’s Gift Nifty Attracts Non-Resident Investors
In terms of benefits for investors, operating within an SEZ, NSE IX provides exemptions from STT (Securities Transaction Tax), commodity transaction tax, dividend distribution tax, and capital gain tax waivers. This proves advantageous for non-resident players, and even entities from India that have set up subsidiaries there are treated as non-residents and are exempt from taxes, according to NSE IX CEO V Balasubramaniam.
The shift to Gift Nifty does not have a significant impact on retail traders and investors as it is merely a migration from one stock exchange to another. However, it is worth noting that leveraged trades are not permitted for individuals under the Liberalised Remittance Scheme (LRS) route.
Apart from Gift Nifty50, NSE IX will also introduce Gift Nifty Bank, Gift Nifty Financial Services, and Gift Nifty IT derivative contracts. There are plans to gradually introduce other indices in the future.
