The Bombay Stock Exchange (BSE), Asia’s oldest stock exchange, will establish an international exchange in GIFT SEZ-IFC, a multi-services Special Economic Zone (SEZ) being developed as the country’s first International Financial Services Centre (IFSC) by Gujarat International Finance Tec-City Company Ltd (GIFTCL), in Gandhinagar.
The BSE signed a memorandum of understanding (MoU) with GIFT SEZ Ltd, a wholly-owned subsidiary of GIFTCL, at the Vibrant Gujarat Global Summit here on Saturday.
The BSE intends to develop an international exchange providing electronic platform for facilitating trading, clearing and settlement of securities, commodities, interest rates, currencies, other classes of assets and derivatives by international investors in GIFT SEZ-IFSC in GIFT City, subject to necessary approvals and operating guidelines for IFC, Ramakant Jha, Managing Director and CEO, GIFTCL, said.
As per the MoU, the BSE, along with its associates and members, will invest up to Rs 150 crore for establishing up to a 3 lakh square feet built-up area (BUA) to set up this international exchange. GIFT SEZ has been notified as an International Financial Services Centre (IFSC) by the Government of India as the country’s first IFC.
In the absence of an IFSC in India, India has lost roughly 50% market share in the two most important India-related products, with Rupee and Index being mostly traded on foreign platforms instead of onshore trading in such products. For instance, the trading volumes of the rupee and India-based indices is estimated at over $ 100 billion a day. Overseas venues like SGX (Singapore), DGCX (Dubai) and CME (Chicago, and worldwide), and the global OTC and NDF markets, have been very successful in this trading.
If even a small slice of this trading comes back to India through the international exchange, it would be a substantial achievement. It will also help international companies raise finance from other global investors within the IFC which can compete on rules, regulations and ease of business with other IFCs such as Hong Kong, Singapore, Dubai and London.
Jha said BSE’s international exchange at GIFT City is a major step in making India’s first IFSC into a global financial hub. “Our aim is to make GIFT at or above par with globally benchmarked financial centres such as Shinjuku-Tokyo, Lujiazui-Shanghai, La Defense-Paris and London Dockyards.”
Ashish Chauhan, MD & CEO, BSE, said this will help India compete with other destinations and allow Indian and international companies making GIFT as one of the foremost IFCs.
Earlier, BSE Brokers’ Forum, the association of BSE brokers, had entered into an agreement with GIFT City for setting up their operations and shifting their back-end operations in the domestic finance enclave. The Forum has been allotted 4.5 lakh square feet of development rights with total investment expected at around Rs 200 crore.