GIFT City’s financial evolution: Direct listings, Gift Nifty and expert committee insights

Direct Listing Revolution in GIFT City 

The International Financial Services Centres Authority (IFSCA) is steering a transformative shift in India’s financial landscape, targeting the direct listing of Indian companies in the Gujarat International Finance Tec-City (GIFT City) by April 2024. Several Indian companies currently employ American Depository Receipts (ADRs) and Global Depository Receipts (GDRs) to list on US exchanges, but the IFSCA’s initiatives are set to change this.

Notification rules from the Finance Ministry are anticipated, and the Reserve Bank of India (RBI) is expected to introduce rules on overseas investment regulations. Furthermore, amendments from the Securities and Exchange Board of India (SEBI) will be crucial in allowing already listed companies to make their way to IFSC.

In October, the Corporate Affairs Ministry took a significant step by notifying relevant sections under the Companies Act. This move enables Indian companies to list their shares in specified jurisdictions, initially facilitated through a designated facility at IFSC in GIFT City, Gujarat.

Merger of International Exchanges at GIFT IFSC 

To streamline operations and consolidate the investor pool, the IFSCA anticipates the merger of international exchanges of the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) at GIFT IFSC by January 2024.

SGX Nifty’s Transformation 

The widely-used SGX Nifty, a tool used by traders and investors for years to anticipate the Nifty’s opening, has undergone a rebranding and is now known as Gift Nifty. This transformation involves the relocation of Nifty derivative contracts valued at $7.5 billion from the Singapore Exchange to the NSE IX in India.

The shift has received regulatory approvals from the Monetary Authority of Singapore (MAS) and the International Financial Services Centre Authority (IFSCA). The NSE IX, a subsidiary of the NSE-based GIFT City, is now positioned to offer dollar-denominated trading in various products.

The Indian government envisions GIFT City as a hub for both Indian and global financial and IT businesses. Tapan Ray, MD & Group CEO of GIFT City, emphasizes that Gift Nifty will play a crucial role in realizing the Prime Minister’s vision to make India a net exporter of financial services.

Extended Trading Hours 

Gift Nifty boasts extended trading hours, spanning two sessions and offering accessibility for almost 21 hours. This surpasses the previous trading hours of SGX Nifty, creating an overlap with trading sessions in Asia, Europe, and the US.

Available Contracts and Accessibility 

Investors and traders can check Gift Nifty contracts on the NSE IX website. Alongside Gift Nifty 50, other contracts available under the NSE IX include Gift Nifty Bank, Gifty Nifty Financial Services, and Gifty Nifty Derivatives contracts, with plans to introduce additional indices in the future.

Benefits for Investors and Retail Traders 

Investors stand to benefit from NSE IX’s operation within a Special Economic Zone (SEZ), making them eligible for exemptions from Securities Transaction Tax (STT), commodity transaction tax, dividend distribution tax, and capital gains waivers. NSE IX CEO V Balasubramaniam emphasizes that this shift is advantageous for non-resident players, with entities from India setting up subsidiaries in GIFT City enjoying tax exemptions.

Global Reinsurance Summit and Government’s Commitment 

In a recent update, the FSCA-IRDAI GIFT IFSC Global Reinsurance Summit showcased collaborative efforts between IFSCA, IRDAI, and GIFT City. The summit, attended by industry leaders and stakeholders, focused on India’s commitment to becoming a resilient reinsurance ecosystem aligned with global standards.

During the summit, the Hon’ble Union Minister of Finance and Corporate Affairs, Nirmala Sitaraman, emphasized the government’s vision for GIFT-IFSC. The minister highlighted the potential of direct listings of securities in international exchanges within IFSC, facilitating global market access for startups and companies.

IFSCA’s Strategic Initiatives and Expert Committee’s Recommendations 

The IFSCA’s strategic development of GIFT-IFSC received acknowledgement from the Union minister during her visit. The NSE-IFSC SGX connect and efforts to reduce the cost of doing business were applauded.

The expert committee, chaired by Shri G. Padmanabhan, submitted a report on ‘Onshoring the Indian Innovation to GIFT IFSC.’ Focused on encouraging startups to establish a presence in GIFT IFSC, the committee recommended measures to develop the International Innovation Hub at GIFT IFSC.

Conclusion 

In conclusion, the ongoing financial developments in GIFT City underscore India’s ambition to establish itself as a global financial powerhouse. The facilitation of direct listings, the introduction of Gift Nifty, and initiatives to attract innovative startups all contribute to GIFT City’s emergence as a hub for international financial services. As regulatory frameworks align and initiatives progress, the financial ecosystem in GIFT City is poised for significant growth and global recognition.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.