Singapore Exchange Ltd (SGX) and National Stock Exchange of India Ltd are to remain partners for a little longer than both anticipated.
An arbitrator deciding on a quarrel between the exchanges over Indian stock futures contracts ordered them to extend their licensing agreement beyond August and for at least two months after the end of arbitration. It ordered SGX to refrain from offering new India equity derivatives products such as those announced by the bourse in April.
Hearings on evidence in the case are expected to start early next year, SGX said in a statement on Saturday.
The fight threatens to unravel an 18-year partnership between two of Asia’s largest exchanges and make it more difficult for international investors to hedge their exposure to India’s US$2.2 trillion equity market.
The Indian exchange dragged its Singapore counterpart to court last month to stop SGX launching what it viewed as copycat contracts to the licensed NIFTY futures. The dispute moved to arbitration.
“This is a renegotiation process,” JPMorgan Chase & Co analyst Harsh Wardhan Modi said in a Bloomberg Television interview yesterday. “The fact that both of them are discussing it via lawyers — but they’re still discussing it — ultimately I don’t think this is totally finished yet.”
The disagreement erupted when SGX in January decided to launch single-stock futures on some of India’s biggest companies.
Days later, India’s three national exchanges said they would stop all overseas licensing and data deals related to their equities.
In April, the Singapore bourse said it was launching SGX India Futures to help investors transition after the end of the NIFTY pact in August, even as the two discussed collaborating on a trading link.
The benchmark Straits Times Index has fallen about 2 percent in the same period.
“Having a key product erode in such a manner is not an insignificant matter for SGX,” Goldman Sachs Group Inc analyst Gurpreet Singh Sahi wrote in a note late on Sunday.
While the interim order provides near-term relief, there is still uncertainty over SGX’s India offering, Singh said.
Index giant MSCI Inc, Singapore’s regulator and international investors have weighed in on the fight between the exchanges.
MSCI has criticized the Indian exchanges’ move to cut off licensing ties as anti-competitive and is reviewing whether nations — including India — that restrict investor access should have their values in its indices capped.
The Monetary Authority of Singapore urged all parties to find an “amicable solution” and warned that a prolonged dispute would hurt international investors.
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