NSE follows BSE with plan to set shop in Gujarat's GIFT city

The country’s biggest bourse, the National Stock Exchange (NSE), plans an international exchange at Gujarat’s ‘GIFT City’, the country's first proposed international financial services centre.

The exchange signed a memorandum of understanding (MoU) on Thursday with the GIFT City project developers in Ahmedabad, in the presence of Gujarat’s finance minister, Saurabh Patel. NSE’s rival, BSE Ltd, had signed a similar undertaking with the Gujarat government last month.

“NSE intends to develop an international standard exchange, providing an electronic platform for facilitating trading, clearing and settlement of securities, and shall explore the possibility of starting trading facilities in different asset classes like equities, interest rates and currencies, among others, and their derivatives, subject to fulfilment of existing laws and guidelines,” the bourse stated.

The GIFT Special Economic Zone is an equal joint venture between a state government undertaking, Gujarat Urban Development Company, and IL&FS. This international exchange is to be set up inside the SEZ.

According to those in the sector, the SEZ is pinning hopes on tax concessions in the Union Budget. Sources say the SEZ is expected to be granted the status of a ‘deemed foreign territory’, which could prove beneficial for investors seeking exposure to Indian markets through the international exchange.

“We at NSE would like to be a part of the vision of the government to develop an International Financial Services Centre in India. This will help the nation to compete with other similar global destinations,” said Chitra Ramkrishna, managing director of NSE.

The international finance centre is also aimed at curbing the export of India’s capital markets. The country is estimated to have lost 50 per cent market share to foreign bourses in the India-related rupee and index products market. The trading volume for the rupee and India-based indices products is pegged at a little over $100 billion, said BSE last month.

Ramakant Jha, managing director, GIFT City, said the SEZ aimed to be “above par with other globally benchmarked financial centres”.