India shuts down offshore derivatives trading

Indian_stocksThree Indian stock exchanges will halt the offshore trading of derivatives linked to their equity markets. The National Stock Exchange of India, the Bombay Stock Exchange and the Metropolitan Stock Exchange of India say they will end licensing arrangements with foreign bourses to stop foreign derivatives trading. “It is observed that for various reasons the volumes in derivative trading based on Indian securities including indices have reached large proportions in some of the foreign jurisdictions, resulting in migration of liquidity from India, which is not in the best interest of Indian markets,” said a joint statement from the exchanges. Investors anticipate that the Singapore Stock Exchange, which has hosted the trading of futures and options based on India's Nifty 50 index since 2000, would be hard hit. The exchange launched single-stock Indian futures on February 5, only days before the announcement. Some commentators suggest the Indian stock exchanges' decision is designed to bring valuable derivatives trading onshore, for instance to the Gujarat International Finance Tec-City, a new deregulated zone where investors can trade dollar-denominated Indian equity derivatives. ©2018 funds global asia

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