In a pioneering move, the well-known Singapore Exchange (SGX) NIFTY has been rechristened as GIFT NIFTY and commenced trading from the Gujarat International Finance Tec-City (GIFT City) in Gujarat, India. This milestone marks the first cross-border initiative aimed at connecting the capital markets of India and Singapore. The transition of the NIFTY derivative contracts from the Singapore Exchange to the NSE International Exchange (NSE IX) in GIFT City opens up new opportunities for investors and positions GIFT City as a prominent global financial hub.
Transitioning to GIFT NIFTY: A Game-Changer for Cross-Border Trading
With the rebranding of the SGX NIFTY as GIFT NIFTY, derivative contracts valued at $7.5 billion have shifted from the Singapore Exchange to the NSE IX in GIFT City. The move was made possible through regulatory approvals obtained from the Monetary Authority of Singapore (MAS) and the International Financial Services Center Authority (IFSCA). This transition establishes GIFT City as a key player in facilitating cross-border trading between India and Singapore, offering investors new avenues for accessing and trading in NIFTY futures.
NSE IX and GIFT City: A Hub for Global Financial Activities
NSE IX, a subsidiary of the National Stock Exchange (NSE), operates within the GIFT City Special Economic Zone (SEZ) in Gujarat. GIFT City aims to become a prominent global financial hub, attracting both Indian and global financial and IT businesses. The SEZ framework provides favorable tax benefits and regulatory exemptions, making it an attractive destination for investors and financial institutions. By relocating the NIFTY derivative contracts to GIFT City, the Indian capital market gains a significant boost in terms of liquidity and international accessibility.
Extended Trading Hours and Increased Opportunities
One of the major advantages of the transition to GIFT NIFTY is the extended trading hours offered by NSE IX. With trading sessions spanning almost 21 hours, GIFT NIFTY aligns its timings with Asian, European, and US trading hours, maximizing market accessibility and liquidity. This extended trading window provides investors with increased opportunities to trade NIFTY futures and take advantage of global market movements, enabling them to better manage their portfolios and respond to market trends.
Benefits for Investors: Tax Exemptions and Non-Resident Status
Investors stand to benefit significantly from the transition to GIFT NIFTY and trading through NSE IX in GIFT City. The SEZ status of GIFT City grants investors exemptions from various taxes, including the Securities Transaction Tax, commodity transaction tax, dividend distribution tax, and capital gains tax. Furthermore, entities from India that establish subsidiaries in GIFT City are treated as non-residents, enjoying the associated tax benefits. These exemptions and non-resident status create a favorable environment for investors, reducing their tax burden and increasing their potential returns.
Strengthening Bilateral Relations and Economic Cooperation
The launch of GIFT NIFTY represents a significant milestone in strengthening bilateral relations between India and Singapore. The cross-border initiative facilitates increased economic cooperation and trade between the two nations, fostering mutually beneficial partnerships in the financial sector. This development further positions India as a global financial destination and enhances its integration into the international capital market landscape.
Looking Ahead: GIFT City’s Future as a Global Financial Hub
With the successful transition of NIFTY derivative contracts to GIFT City’s NSE IX, the financial ecosystem in GIFT City is poised for rapid growth. The establishment of GIFT City as a global financial hub will attract Indian and global financial institutions, promoting innovation, collaboration, and cross-border investments. By harnessing technological advancements and creating an investor-friendly environment, GIFT City aims to become a leading financial center, providing diverse financial services to a global clientele.