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The NSE has claimed that there are at least 12 similarities between its benchmark product Nifty, and Bank Nifty that it had licensed to trade in Singapore, and the new India Futures index that the Singapore bourse SGX plans to launch. After being in partnership for 18 years for trading Indian products in Singapore, the NSE this month dragged the SGX to court over breach of intellectual property rights (IPR).
The NSE terminated its partnership with the SGX in February, following which the latter decided to launch its own index based on the Indian market. The NSE moved court as it believes that the SGX was blatantly copying its products that were trading in Singapore under a licensing agreement earlier. Documents reviewed by BusinessLine show that the NSE has listed out certain contract specifications of the new product that the SGX plans to launch to prove its point.
The NSE claims that SGX India Futures and SGX India Bank Futures are similar to its Nifty and Bank Nifty contracts that were earlier traded in Singapore on account of ticker symbol for identifying the contracts, underlying asset, price at which the contract is settled at maturity, standardised deliverable quantity/ amount of underlying asset, duration of months within which the contract matures and can be settled by delivery and the last day of trading in a contract prior to expiration. Also, SGX’s contract specifications mirror the NSE licensed products on trading hours on the last trading day, minimum price change allowed in a contract, maximum price amount the contract can move daily, basis of settlement, ownership restrictions and minimum amount of large trades that can be executed off-market.
Gaining expertise
The NSE has further submitted to the court that SGX Options on SGX India Futures too are just a similar version of options contracts based on the erstwhile SGX Nifty and SGX Bank Nifty with specifications mentioned above.
According to experts, another important point that the NSE would argue is that the SGX gained expertise on NSE products over the 18 years of its licensing agreement. Otherwise, had the SGX been confident of being able to create an Indian market-based product different from the NSE, it would have got out of the agreement much earlier and saved on the hefty fees it was paying to the Indian bourse. The terms of an earlier licensing agreement between the NSE and the SGX would play a crucial role in determining the case.
The SGX did not reply to an email query, which was sent to it past Monday’s close of trading hours — 6 pm Singapore time. The NSE said it will not comment since the issue was sub judice .
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