BSE jumps 2% on move to curb Nifty trading in Singapore

India's stock exchanges to stop licensing index stock prices to foreign exchanges

India's stock exchanges to stop licensing index stock prices to foreign exchanges

The decision of Indian exchanges to impose restrictions on the licensing of indices and market data is likely to impact trading on some 11 worldwide bourses which trade Nifty 50 - the stocks of top 50 Indian companies as well as other Indian related products.

Shares in Singapore Exchange Ltd (SGX) fell 8 percent following an unexpected move by India's three main stock exchanges to stop licensing products and data to foreign exchanges to prevent trading from migrating overseas.

The SGX reiterated and reassured global traders of its Indian product trade from Monday.

"We have not yet had an opportunity to analyse the implications of this announcement, but it appears likely to disrupt trading on numerous exchanges around the world and alarm worldwide investors", said FIA, a leading trade association for the global listed and cleared derivatives markets. SGX said, "Our licence agreement with the NSE will ensure the continuity of listing and trading our Nifty suite of derivative products till August 2018, at a minimum". While it now makes up only 12% to 14% of the country's gross domestic product (GDP)' far from the 70% corporate sector making up the entire GDP of the US, India's corporate sector is rampantly thriving to become one of Asia's leaders.

The exchange said on Sunday that it will develop and launch new India-access risk products.

The SGX plans to increase its offer of this single stock futures contract of Indian top range listed companies hence on, responding to global market demand for trading in Indian companies' stocks and shares.?

The SGX added that it is working with the NSE towards a "viable long-term solution" that would help clients retain existing positions, and hopes to announce details shortly.

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"SGX and NSE (National Stock Exchagne) are long term partners and have collaborated since 2000 to develop and internationalise India's capital markets", stressed the statement.

Actions raised hopes that Indian exchanges could see increased volumes in GIFT City, an global finance centre in Gujarat. The NSE move won't have a material impact on its "immediate" financial results, SGX also said.

"Our product development efforts detailed above will support the delivery of longer term financial results", said the exchange. The announcement comes in a highly-volatile market environment, which will make MSCI investors even more sensitive to changes like this, according to trading sources.

Most of the global interest in India, and inflows, comes through the MSCI Emerging Markets Index (MSCI EM) given MSCI India's 9 per cent weightage within this index, according market reports.

Presently, the BSE is the 11th biggest stock exchange in the world with a total market capitalization of $1.70 trillion as of January 23, 2015. Several analyst notes were published after India's announcement, with at least three banks cutting their rating on SGX's stock.

It remains to be seen if the new curbs would force overseas investors to buy into domestic derivatives to gain exposure to India, or destroy demand from investors and hurt the NSE's reputation as an index provider.

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