Singapore overtakes Dubai in rupee trading
Dubai has lost out to Singapore as the top offshore market for trading in the rupee. The Singapore Stock Exchange (SGX) had a 76 per cent share in rupee-dollar futures as 58,651 contracts were traded on its platform on an average every month this year up to November.
The Dubai Gold and Commodities Exchange (DGCX) could trade only 18,114 contracts on an average every month during the same time, data show. This trend could only increase India’s worries as it shows that Singapore is consolidating its position as the destination of choice in trading Indian financial products, experts told BusinessLine.
Just 3-5 years ago, DGCX had more than 75 per cent volumes in offshore rupee-dollar futures as they traded between 30,000 and 45,000 contracts on an average every month. The position has now reversed and SGX has gained supremacy, data show.
India has been making efforts to shift trading of linked equity products on the SGX to Gujarat-based GIFT City that houses two offshore trading venues promoted by the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). NSE’s Nifty index has been the glory of SGX since it attracts several foreign players to Singapore, protecting them from India’s market regulator SEBI and the tax net.
Now, shifting rupee trading to Singapore is likely to make India’s task even more arduous, regulatory experts said. The contract size of rupee-dollar futures on the SGX and DGCX at ₹20 lakh per lot is the same. But the diligent efforts by SGX and the doles to forex traders in India and Dubai have caused the shift in rupee trading volumes, the sources said.
“SGX has been heavily marketing its rupee-dollar futures to traders in Dubai and India. It doled out incentives for creating open interest and volumes in the currency pair on their platform. It is also convenient to those who trade Nifty index and Indian stocks on SGX. They can hedge their rupee dollar bets in Singapore without regulatory hassles and additional costs,” said a trader with a large foreign fund.
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