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India International Exchange, promoted by the BSE in the International Financial Services Centre (IFSC) in Gujarat, has managed to give a tough fight to offshore Nifty derivatives being traded on the Singapore Exchange (SGX).
Derivative trade in India 50, an index which mimics Nifty, on India INX has been registering a daily turnover of $1.5 billion, which is equivalent to the Nifty derivatives traded on SGX.
Incidentally, the NSE which was in a pitched battle with SGX for the last two years, is close to reaching an agreement with the foreign bourse to route Nifty trades executed on SGX to NSE-International Financial Services Centre at GIFT (Gujarat International Finance-Tec) City in Gandhinagar.
Gold derivative trading in India INX has increased eight times to about $400 million, almost equal to the turnover on the Dubai Gold Exchange.
V Balasubramaniam, MD and CEO, India INX, said foreign investors find it convenient to trade in GIFT City as they can execute the trades in US dollar unlike in Singapore where they have to use Singapore dollar. Foreign entities are hopeful that the new government would iron out the issues, he said. Though trades in GIFT City is gaining ground, ease of doing business still remains a challenge compared to competing countries.
The government recently allowed non-resident Indians to trade in exchanges established in GIFT City. NRIs have to open a trading account with brokers for trading on the exchange platform. India INX, which is open 22 hours a day, can also provide global cues for Indian investors.
The Cabinet Committee of Ministers headed by the Prime Minister in the previous NDA government had approved a Bill to establish a unified authority for regulating all financial services in IFSCs through the International Financial Services Centres Authority Bill, 2019. Now, the Bill has to be cleared by the Parliament.
Currently, entities in IFSC are regulated by multiple regulators including RBI, SEBI and IRDAI. The dynamic nature of business in the IFSCs needs a high degree of inter-regulatory coordination. It also requires regular clarifications and frequent amendments in the existing regulations governing financial activities in IFSCs.
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