India-Singapore Explore 4 Key Areas to Deepen NSE-SGX Market Linkage

India and Singapore are exploring ways to deepen collaboration between the National Stock Exchange (NSE) and Singapore Exchange (SGX), with discussions covering derivatives products, market linkages and the possibility of dual listings. The proposed collaboration could help Indian companies gain access to a wider pool of global capital while making Indian equity and derivatives markets more accessible to international investors.

The issue was discussed at the 4th India-Singapore Ministerial Roundtable (ISMR) in Singapore, where Singapore Deputy Prime Minister Gan Kim Yong said the two exchanges were exploring options including derivatives products and “dual listing possibilities”. While the discussions remain exploratory, a broader NSE-SGX partnership could support India's efforts to internationalise its financial markets and attract greater foreign institutional participation.

Building on the Existing NSE-SGX Linkage

The potential collaboration builds on an existing relationship between the two exchanges. India-linked derivatives were previously traded on SGX, providing overseas investors exposure to Indian indices. However, the launch of GIFT Nifty in July 2023 marked a major shift, with Nifty derivatives trading migrating from Singapore to NSE International Exchange (NSE IX) at GIFT City through the NSE-SGX connectivity arrangement.

The renewed discussions indicate that India and Singapore may now explore opportunities beyond the existing arrangement. International derivatives products, greater access for overseas investors and possible mechanisms to help Indian corporates connect with foreign capital are among the areas that could emerge from the discussions.

Dual Listings Could Expand Access to Global Capital

One of the most significant possibilities being explored is dual listing. If an appropriate framework is developed, Indian companies could potentially gain access to a broader international investor base and deeper cross-border liquidity.

Dual listings may also improve global visibility, institutional participation and price discovery for Indian companies. This could be particularly relevant for Large-Cap companies, technology firms, financial sector players and high-growth businesses looking to raise substantial capital and strengthen their presence among global investors.

Singapore, as a major financial hub in Asia, could provide Indian companies greater access to international institutional investors and act as a gateway to other global capital markets. Such a framework could potentially complement domestic fundraising avenues and broaden the investor base available to Indian corporates.

Boost for Internationalisation of Indian Markets

A stronger NSE-SGX collaboration could also support the broader internationalisation of India's capital markets. India's equity market has grown significantly in size and importance, increasing interest among global investors seeking exposure to one of the world's fastest-growing major economies.

Greater exchange connectivity and new derivatives products could make it easier for overseas investors to participate in Indian markets. Increased foreign participation could, in turn, support liquidity and create opportunities across equity trading, derivatives, market data, technology and settlement services.

The proposed collaboration also aligns with India's broader objective of developing GIFT City into a leading international financial centre. The migration of SGX Nifty trading to GIFT Nifty was an important step in bringing offshore trading of Indian indices closer to India's financial ecosystem.

Market Infrastructure Players Could Benefit

The announcement of renewed discussions did not trigger any significant immediate reaction in the shares of market infrastructure-related companies. However, a deeper India-Singapore exchange linkage could have longer-term implications for exchanges and other market infrastructure participants.

NSE, which dominates India's equity derivatives market, could benefit from higher trading volumes and increased revenue opportunities from products and market data if overseas investor participation expands. The development could also support sentiment around India's capital market infrastructure as NSE moves towards its public listing plans.

Other market infrastructure participants could also benefit from increased cross-border activity, particularly in areas such as clearing, settlement, technology and data services.

Regulatory Challenges Remain

Despite the potential benefits, significant regulatory and practical challenges will need to be addressed before any broader arrangement can be implemented. Developing a framework for cross-border derivatives products or dual listings would require coordination between regulators, exchanges and other market participants.

The migration of SGX Nifty trading to GIFT Nifty also highlights India's intention to retain a greater share of offshore trading activity and the associated liquidity within its own financial ecosystem. As a result, India is likely to pursue a carefully regulated approach that balances greater openness to foreign capital with the need to retain oversight and strengthen domestic market infrastructure.

Therefore, while the renewed NSE-SGX discussions could be strategically important for both India and Singapore, any meaningful impact on the markets is likely to take time. The immediate market impact may remain limited, but a successful expansion of the partnership could eventually help Indian companies access global capital while supporting the international growth of India's equity and derivatives markets.

Disclaimer: The article is for informational purposes only and not investment advice.