Daily Current Affairs : 5-July-2023
The Singapore Exchange’s popular trading platform, SGX NIFTY, has recently undergone a significant transformation by moving its operations to the Gujarat International Finance Tec-City (GIFT City) in Gujarat. This cross-border initiative, now known as GIFT NIFTY, marks the first of its kind in connecting the capital markets of India and Singapore. In this essay, we will explore the key details, significance, and background of GIFT NIFTY and its impact on both countries’ financial ecosystems.
Key Details
- Exclusive Arrangement: The agreement between SGX and the National Stock Exchange (NSE) of India prohibits the NSE from entering into similar arrangements with any other exchange. This exclusivity gives GIFT NIFTY a competitive advantage in connecting India and Singapore’s capital markets.
- Extended Contract Duration: The initial agreement between SGX and NSE IX spans five years, with the possibility of extending it for an additional two years. This extended contract duration ensures a long-term commitment to fostering cross-border trading and cooperation between the two countries.
About GIFT NIFTY
With the transition of trading volume and liquidity from SGX NIFTY to GIFT IFSC, the platform has been rebranded as GIFT NIFTY. This move strengthens GIFT IFSC’s position as an international financial hub and expands its outreach to foreign investors. GIFT NIFTY currently offers four products, namely GIFT Nifty 50, GIFT Nifty Bank, GIFT Nifty Financial Services, and GIFT Nifty IT derivatives contract.
Significance for India
- Milestone for GIFT IFSC: GIFT NIFTY represents a significant milestone for GIFT IFSC as it establishes stronger ties with foreign investors. By attracting international participation, GIFT IFSC aims to enhance the capital market ecosystem in GIFT City and drive economic growth.
- Bridge to the World: For the past two decades, SGX has acted as a bridge between India and the global financial market. This trading link has facilitated connections between two of the world’s fastest-growing economies, allowing investors to access Indian markets through the Singapore exchange.
- Unique Trading Link: GIFT NIFTY introduces a unique trading link where trading and matching occur in India, while clearing and settlement operations take place in Singapore. This innovative arrangement combines the strengths of both countries, promoting efficient and seamless cross-border trading.
About GIFT City
GIFT City is a planned business district located in Gujarat. Spread over 886 acres, it serves as a competitive hub for financial services and technology-related activities. The city houses India’s first International Financial Services Centre (IFSC) and features a multi-service Special Economic Zone (SEZ) and a Domestic Tariff Area (DTA). GIFT City aims to provide a conducive environment for businesses, foster innovation, and attract both domestic and international investors.
Important Points:
- The popular Singapore Exchange (SGX) NIFTY has been rechristened as GIFT NIFTY and started trading from GIFT City in Gujarat, marking the first cross-border initiative connecting India and Singapore’s capital markets.
- The National Stock Exchange (NSE) of India has entered into an exclusive arrangement with SGX, preventing the NSE from making similar agreements with other exchanges.
- The initial contract duration between SGX and NSE IX is five years, with the possibility of extension for an additional two years.
- GIFT NIFTY offers four products: GIFT Nifty 50, GIFT Nifty Bank, GIFT Nifty Financial Services, and GIFT Nifty IT derivatives contract.
- The transition of trading volume and liquidity from SGX NIFTY to GIFT IFSC prompted the rebranding of the platform as GIFT NIFTY.
- GIFT NIFTY is a significant milestone for GIFT IFSC, enhancing its outreach to foreign investors and strengthening the capital market ecosystem in GIFT City.
- SGX has been a bridge between India and the world, facilitating connections between two rapidly growing economies.
- GIFT NIFTY represents a unique trading link with trading and matching taking place in India and clearing and settlement operations occurring in Singapore.
- GIFT City is a planned business district in Gujarat, featuring a multi-service Special Economic Zone (SEZ) and India’s first International Financial Services Centre (IFSC).
- GIFT City aims to offer a competitive edge to financial services and technology-related activities, attracting both domestic and international investors.
Why In News
Recently, the popular Singapore Exchange (SGX) NIFTY underwent a rechristening and began trading under the new name GIFT NIFTY at GIFT City in Gujarat. This move signifies a significant milestone as GIFT City establishes itself as a thriving hub for international financial markets.
MCQs about GIFT NIFTY
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What is the primary significance of GIFT NIFTY for GIFT IFSC and GIFT City?
A. Strengthening domestic investors’ participation
B. Enhancing foreign outreach and capital market ecosystem
C. Expanding the range of derivative products
D. Establishing a new financial regulatory framework
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Which exchange has been India’s bridge to the world for the past two decades?
A. Bombay Stock Exchange (BSE)
B. National Stock Exchange (NSE)
C. Singapore Exchange (SGX)
D. London Stock Exchange (LSE)
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What is the unique feature of the GIFT NIFTY trading link?
A. Trading, matching, and clearing operations in Singapore
B. Trading and matching in India, clearing and settlement in Singapore
C. Trading, clearing, and settlement in India
D. Trading and settlement in Singapore, clearing in India
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What is the primary objective of GIFT City?
A. Attracting domestic investors to Gujarat
B. Fostering innovation in technology-related activities
C. Offering a competitive edge to financial services
D. Establishing a manufacturing hub
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