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India's bourses to stop licensing index, stock prices

12 February 2018

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.

Although foreign investors have pumped more than U.S. $77 billion into India since 2012, exchanges have long felt they are missing out, because derivatives have been popular in Singapore, which is seen as offering lower tax and a more certain regulatory regime.

Mumbai: India's three main stock exchanges said yesterday they would stop licensing their indexes and securities or providing data to foreign exchanges, saying such agreements had led trading to migrate outside of the country.

Tyagi was speaking on concerns that the move was anti-competition and whether it stifled market efficiency. "We are trying to consolidate liquidity in the market". The latest move will not apply to exchange-traded funds or similar products, the three stock exchanges said.

MSCI India is the most popular India index amongst institutional investors outside of India. Also, significant tightening of vehicles such as participatory notes (P-notes)-used by who don't want to register with local authorities-has given more impetus on these platforms.

Analysts and experts said the move to cancel licensing data to overseas bourses would especially affect SGX's Nifty 50 index futures, which is the Singapore Exchange's flagship Indian equity derivatives product. Going ahead, domestic exchanges will not license their indices, such as Nifty or Sensex, for the launch of offshore derivatives contracts on them.

"SGX wishes to assure market participants that we will take all measures to maintain orderly trading and clearing of SGX India equity derivatives for our global clients", the Singapore bourse said in a statement.

India's move came after SGX launched single-stock India futures on February 5.

Singapore has become a hub of offshore trading for many markets.

SGX isn't the only overseas exchange affected by Friday's move. However, it doesn't mean the volumes will shift back to India.

SGX sought to defuse tensions on Sunday with a statement that said it will work with NSE "toward solutions for global investors". Unlike India, and Dubai don't impose tax on short-term or long-term gains. Meanwhile, India has tried to create its own global financial services centre (IFSC) at Gift City in The platform has not yet been able to attract any significant or volumes as trading costs -though lowers compared to the onshore market- still remain high compared to other overseas Also, the regulatory framework remains restrictive, say experts.

India's bourses to stop licensing index, stock prices