10 Feb 2018 14:02 IST

NSE, BSE move to curb Nifty trading in Singapore, Sensex in Dubai

Govt concerned over trading volumes moving to overseas exchanges

Trading of Nifty futures may be halted on Singapore’s SGX. The Nifty is the world’s largest traded derivative index in the off-shore market and a top volume generator on the SGX.

In a move to curb shifting of volumes to overseas markets after the imposition of long-term capital gains tax (LTCG), Indian stock exchanges have decided to stop giving data to bourses in Singapore and Dubai. BSE’s Sensex is traded on the Dubai Gold and Commodity Exchange (DGCX). The move could lead to a legal wrangle between the exchanges in international courts as the licence has been terminated before it expired, a source told BusinessLine .

Both the NSE and the BSE were nudged by market regulator SEBI and the government to take the measure, the source said. Both exchanges issued a joint statement on Thursday saying they were discontinuing giving out data for their indices.

Foreign traders, worried over India’s compliance norms and tax hassles, used the SGX and DGCX to trade and generated huge volumes. But concerns in India rose as the SGX decided to launch futures trading in 50 of the most liquid Indian stocks this month. The DGCX, too, trades these stocks. SGX and DGCX traders face far lower statutory costs, taxes and compliance requirements.

The SGX and DGCX are far ahead in trading Indian products on their platform. The SGX Nifty alone generates average daily volumes of $1 billion. Gujarat’s GIFT exchange, which was supposed to bring back trading volumes in financial markets that India lost to off-shore destinations or tax havens, has largely been a non-starter for equity trades.