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BSE To Establish First International Exchange At Gujarat's GIFT City

Tuesday, January 13, 2015
By A Business Reporter

The Bombay Stock Exchange (BSE) will establish an International Exchange in GIFT SEZ-IFC, a multi-services Special Economic Zone (SEZ) being developed as India’s first International Financial Services Centre (IFSC) by the Gujarat International Finance Tec-City Company Ltd (GIFTCL).

In this regard, the BSE signed a memorandum of understanding (MoU) with GIFT SEZ Ltd, a wholly-owned subsidiary of GIFTCL at the Vibrant Gujarat Global Summit earlier yesterday. The premier exchange 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 subject to receiving necessary approvals and operating guidelines for International Financial Centre.

As per the MoU, the BSE along with its associates and members will invest upto Rs. 150 crore for establishing 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 by the Government of India as India’s first International Financial Centre.

In the absence of an IFSC in India, the country has roughly lost 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 volume of the rupee and India based indices is estimated at over USD 100 billion a day. Overseas venues like SGX (in Singapore), DGCX (in Dubai) and CME (in Chicago, and worldwide), and the global OTC and NDF markets, have been very successful in this trading.

By establishing an International Exchange, even if a small slice of this trading comes back to India it would be a substantial achievement for India.  It will also help international companies raise finance from other international investors within the International Finance Centre which can compete on rules, regulations and ease of business with other International Finance Centres such as Hong Kong, Singapore, Dubai and London.

Ramakant Jha, MD & Group CEO, GIFT Company Ltd said, “BSE’s International Exchange at GIFT City is a major step in making India’s first IFSC into a Global Financial Hub. This agreement has further strengthened our bond with one of the world’s oldest stock exchange. Our aim is to make GIFT at or above par with globally bench-marked financial centres such as Shinjuku-Tokyo, Lujiazui-Shanghai, La Defense-Paris and London Dockyards.”

Ashish Chauhan, MD & CEO, BSE said, the “BSE is taking a lead in bringing International standards in India, in technology, compliance, corporate governance, promoting SMEs, creation and trading of sustainable and other indices, including the oldest and most popular India based Index, the S&P BSE Sensex. This will help India to compete with other destinations and allow Indian and international companies, making GIFT as one of the foremost International Financial centres in the World such as Hong Kong, Singapore, Dubai and London.”

Earlier, BSE Brokers’ Forum, the association of BSE brokers, entered into an agreement with GIFT City for setting up their operations and shifting their back-end operations in the domestic finance enclave. BSE Brokers’ Forum has been allotted 4.5 lakh square feet of Development Rights with total investment expected at around Rs 200 crore.

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