Context:

The National Stock Exchange (NSE) and the Singapore Exchange (SGX) have entered into a formal agreement to cement the key terms for operationalizing the ‘NSE IFSCSGX Connect’, which will bring international participants and Gujarat International Finance Tec-City (GIFT) agencies together to create a bigger liquidity pool for NIFTY products in GIFT City.

NSE IFSC-SGX Connect

The proposed NSE International Financial Service Centre (IFSC)-SGX Connect aims to bring together the trading of Nifty products in the Gujarat International Finance Tec-City (GIFT) and create a larger pool of liquidity comprising international and home market participants.

IFSC

• IFSC has been designated for all practical purposes as a ‘deemed foreign territory’ that would have the same ecosystem as other offshore locations, but which is physically on Indian soil.
• Any financial institution (or its branch) set up in the IFSC is:
  • Treated as a non-resident Indian located outside India.
  • Expected to conduct business in such foreign currency and with such entities, whether resident or non-resident, as the Regulatory Authority may determine, and
  • Nothing contained in any other regulations shall apply to a unit located in IFSC, subject to certain provisions.
• A bank in IFSC is not subject to CRR or SLR stipulations of RBI.
• Only one International Financial Services Centre is approved in a Special Economic Zone.
• The units in IFSC will be recognised as a non-resident entity under the FEMA regulations of the Reserve Bank of India.

Gujarat International Finance Tec-City Co. Ltd (GIFT) is being developed as the country’s first international financial services centre (IFSC).