The contract is based on the S&P CNX Nifty Index, which is owned by the India Index Services & Products Limited (IISL), a subsidiary of the National Stock Exchange of India Limited (NSE). The S&P CNX Nifty Index is a market capitalization weighted index that comprises 50 component stocks representing some 48% of the total market capitalization of the Indian bourse. IISL has an agreement with Standard & Poor's (S&P), one of the world's leading index services providers, on index construction, computation and review methodology.
SGX S&P CNX Nifty Index futures will be traded in US$, with a contract size equivalent to US$20 multiplied by the S&P CNX Nifty Index. Based on the closing index value of 1,358.05 on 18 August 2000, the size of each futures contract would be about US$27,161 (approximately 5 times that of the contract traded in NSE).
The contract will be cash settled and will trade electronically on the SGX ETS from 12.15 pm to 6.15 pm, Mondays to Fridays. As in the case of other regional equity index futures contracts on SGX-DT, SGX stockbrokers and their Dealer Representatives (DRs) will also be able to trade and broke the SGX S&P CNX Nifty Index futures.
Mr Thomas Kloet, CEO of SGX, said, "The addition of Indian stock index futures to our family of Asian equity index contracts will further strengthen SGX's position as a regional financial hub, and the gateway between Asia and the rest of the world. With a growing number of global investors having exposure to the Indian marketplace, especially in stocks related to technology, internet and pharmaceuticals, this contract will enable participants to effectively trade and hedge their portfolios. It will also provide arbitraging opportunities to investors who trade its counterparts in the Indian exchanges."
Dr R. H. Patil, Managing Director of the NSE said, "We look forward to increased trading in the underlying market on NSE, as well as in our S&P CNX Nifty futures, as a result of SGX's offer of its futures contract tailored for the global and international market participants."
It was announced earlier this year that SGX-DT had signed a Licensing Agreement with IISL and a Memorandum of Understanding (MOU) with the NSE. Under the Licensing Agreement, SGX-DT has been granted a license by IISL to trade futures and options contracts based on the S&P CNX Nifty Index. Under the MOU, SGX-DT and NSE have also agreed to cooperate in areas relating to derivatives trading, market-information sharing, staff training, and technical assistance.
