Until June 2023, investors who resided overseas could bet on Indian markets through SGX Nifty. It was a futures contract on the Nifty 50 index that was listed on the Singapore Exchange (SGX). The index was widely used by investors from around the globe, primarily those who could not directly access Indian markets.

That is history now. The SGX Nifty was rebranded as the GIFT Nifty in July 2023 and relocated to the new global financial hub of India, situated in GIFT City, Gujarat. But what is SGX Nifty, and why did it shift to GIFT Nifty? Let’s find out. 

What was SGX Nifty?

SGX Nifty means Singapore Nifty. It was a derivative contract that was based on India’s Nifty 50 index, which was traded on the Singapore Stock Exchange. It started trading on September 25, 2000. Consider it a mirror image of the Indian Nifty 50, but listed on an overseas exchange. The arrangement facilitated trading by overseas investors and Non-Resident Indians (NRIs) in the Indian market without requiring them to register in India. 

The Singapore Stock Exchange is one of the world’s biggest exchanges. This rendered the SGX Nifty one of the most heavily traded index derivatives across the world. The SGX Nifty reflected how Indian markets might open, as Singapore operates in a different time zone. It thus emerged as a popular tool for making predictions and setting pre-market strategies.

Who Could Trade SGX Nifty?

There are mainly two categories of investors/traders who could trade the SGX Nifty. 

1. Overseas Individual Traders: These are investors/traders based outside India who face regulatory hurdles that prevent them from trading in Indian derivatives markets directly. For them, SGX Nifty offered a practical alternative to gain exposure to Indian equity indices.

2. Foreign Institutional Investors (FIIs) and Global Mutual Funds: Many international institutions and mutual funds maintain significant investments in Indian equities, given India’s position as a fast-growing emerging economy. To hedge their portfolios, especially during the hours when Indian markets were closed, they often used SGX Nifty to manage risk and protect against potential market volatility.

SGX Nifty trading was prohibited under the RBI’s Liberalised Remittance Scheme to Indian residents.

Advantages of SGX Nifty 

Some of the reasons that SGX Nifty was very popular with investors include:

1. Extended Market Hours

SGX Nifty traded 16 hours a day, way after Indian market hours. It allowed investors to react to global developments after NSE’s closing bell.

  • Indian Market Timings: 9:15 AM to 3:30 PM IST
  • SGX Nifty Timings: 6:30 AM to 11:30 PM IST

2. Time Zone Advantage

It opened trading before the Indian markets opened, giving a pre-opening view of how investors are positioned. A number of investors used SGX Nifty to gauge market sentiment. It also facilitated arbitrage between the Indian and Singapore markets.

3. High Liquidity

SGX Nifty witnessed high daily volumes, enabling easy entry and exit from trades. The liquidity assisted in minimising slippage and enhancing large investors’ trade execution.

Why Did SGX Nifty Shift to GIFT Nifty? 

On June 30, 2023, SGX Nifty trading ended in Singapore. All activities have been relocated to the NSE International Financial Services Centre (IFSC) at GIFT City in Gujarat. 

This wasn’t just a location change; it was India’s strategic move to control its financial ecosystem. India wanted to:

  • Build a strong international finance centre within its borders.
  • Reduce the offshore trading of Indian derivatives.
  • Keep the trading volumes and capital flows in India.
  • Attract global money to India’s tax-free trading zone.
  • Control the price discovery of Indian products worldwide.

Impact of Transition 

The move from SGX Nifty to GIFT Nifty brought meaningful changes for both investors and India’s capital markets:

1. Shift in Trading Jurisdiction

Trades that once happened in Singapore are now routed through India’s GIFT City. This means that trades fall under the command of Indian regulatory bodies, such as SEBI and the IFSC authority. Global investors must now align with Indian compliance norms.

2. Boost to India’s Financial Infrastructure

By hosting global derivatives onshore, India strengthens GIFT City as a global financial hub, similar to Singapore or Dubai. It also keeps market data, liquidity, and investor activity within Indian oversight.

3. Loss of Familiarity for Some Traders

Singapore was a well-established, stable trading venue. For some foreign traders, switching to a new platform in a different jurisdiction presented a significant learning curve. It required updated trading systems, new accounts, and fresh legal documentation.

4. Continued Global Access

Despite the shift, the core benefit remains: offshore access to Indian markets, in USD, with extended hours. Traders can still take positions based on global news or after-hours moves, just like before.

Final Thoughts 

SGX Nifty served its purpose well for over two decades. It gave global investors easy access to Indian markets and provided early signals for market direction. But the transition to GIFT Nifty represents India’s growing confidence in managing its financial markets. By bringing offshore trading back home, India strengthens its position as a global financial centre while maintaining control over its market derivatives.

For investors, the access and advantages remain mostly the same. But now, the trades happen on Indian ground, under Indian rules. That’s a win for both transparency and control. 

FAQs

1. What was SGX Nifty?

It was a futures contract based on the Nifty 50 index, traded on the Singapore Exchange. It permitted foreign investors access to Indian markets without registering in India.

2. Why did GIFT Nifty replace SGX Nifty?

India relocated the SGX Nifty to GIFT City to maintain trading within its borders, enhance its global financial presence, and gain better control over capital flows.

3. Can Indian residents trade GIFT Nifty?

No, Indian residents are not allowed to trade GIFT Nifty or SGX Nifty under the RBI’s Liberalised Remittance Scheme. It’s only open to NRIs and foreign investors.