NSE unlikely to take legal route to counter SGX’s move to launch trading

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Mumbai, Apr 15: The National Stock Exchange (NSE) is unlikely to take the legal route to counter the Singapore Exchange’s (SGX’s) move to launch trading in new India products.
According to people in the know, the domestic bourse is considering litigation as the last resort. It intends to resolve the stalemate with SGX through back-channel talks. The NSE is also keen on expediting inter-exchange connectivity between its subsidiary at the Gujarat International Finance Tec-City and SGX.
Earlier this week, SGX had said it would delist all the NSE-licensed contracts and launch trading in new India products, including SGX India futures, SGX India options and SGX India Bank.
Legal experts said SGX’s move did not infringe any rules as these products do not track any benchmark index that is intellectual property of domestic exchanges.
Further, the contracts won’t track the original price movement on the NSE as the settlement price for these will be the average of the final settlement prices of futures contracts traded on the NSE.
“Legal action looks difficult as settlement data is publicly available on the exchange website. However, since the SGX India contracts will not be tracking the price movement of the underlying security on a real-time basis, these contracts might not become as popular as SGX Nifty,” said Sandeep Parekh, founder, Finsec Law Advisors.
“We are examining the matter and discussing with SGX to better understand the product. Any future course of action will be dependent on our assessment of the situation after getting a full understanding of the situation and it would be premature and incorrect to speculate at this time on what that might be. We will have a discussion with other exchanges and the regulator once we have a better understanding of the situation. We have been in discussions with SGX and regulators to look at alternative structures to transition the SGX liquidity to Gift-City,” said an NSE spokesperson.