The dispute between bourses of the two countries threatens to leave global investors without an easy way to safeguard their exposure to the Indian stock market.
Singapore Exchange Ltd. said it will delay the start of its new Indian stock futures contracts, as a court dispute in Mumbai heads to arbitration.
SGX, which is battling with National Stock Exchange of India Ltd. over Indian derivatives in the city-state, had been due to launch the SGX India Futures on June 4. The products were designed as a replacement for the popular Nifty 50 Index contracts, which are due to end in August after NSE canceled its licensing and data deal with its Singapore counterpart.
The dispute between two of Asia’s biggest bourses has been simmering for months and threatens to leave international investors without an easy way to hedge their exposure to India’s $2.2 trillion stock market. Indian officials are trying to make onshore trading more accessible, and the country’s markets regulator last week said foreigners would be allowed to trade without registering on exchanges in the Gujarat tax-free zone known as Gift City.
“The Monetary Authority of Singapore urges all parties concerned to work together to find an amicable solution that will continue to encourage investments in the Indian market,” the Singapore regulator said in an emailed statement. “A speedy resolution to the dispute will be in the best interest of all parties concerned.”
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SGX said in a statement Tuesday that it reserves all rights in respect of damages caused by the lawsuit. SGX shares fell 1.1 percent to S$7.29, the lowest since April 10.
“Investors should use licensed and legally permissible products to access Indian markets,” NSE said in a statement, adding that it remains committed to providing international investors with good access to Indian markets.
Both parties will have a meeting with the arbitrator, who will attempt to decide the case by June 16, according to a Bombay High Court order on Tuesday. The parties can raise issues including jurisdiction and whether the dispute is subject to arbitration, the judge said. The court last week issued an interim injunction against SGX.
Tensions between the companies erupted in January, when NSE asked its counterpart to delay plans to introduce single-stock futures that would track some of India’s largest companies. SGX rebuffed the request, and on Feb. 9 India’s three national exchanges said they’d cancel their agreements with overseas bourses. NSE sued SGX last week, claiming the derivatives planned for the June 4 start were “unlicensed products” and “identical” to the Nifty-branded futures.
“The range of available financial instruments for investors to hedge exposures and manage risks in Indian equities will be reduced,” because of the fight between the exchanges, MAS said. “A prolonged dispute will impact the accessibility of the Indian equities market to international investors.”
The dispute has scuppered talks between SGX and NSE about creating a cross-border trading link, according to people familiar with the matter. SGX said in its Tuesday statement that it “remains open to a collaborative long-term solution that will benefit Indian markets.”
– Bloomberg