InvestorQ : What is the difference between the Nifty and the SGX Nifty? Why has SGX Nifty trading become so popular?
Debbie Mascarenhas made post

What is the difference between the Nifty and the SGX Nifty? Why has SGX Nifty trading become so popular?

Answer
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Crowny Pinto answered.
1 year ago


SGX Nifty is the Nifty futures based on the Nifty value that is traded on the Singapore exchange. One SGX Nifty contract is twice the size of the Nifty contract or equal to 2 lots of Nifty. Many global investors prefer to use the SGX Nifty rather than the NSE Nifty futures. Here are some of the reasons.

· SGX Nifty does not attract securities transaction tax (STT) since it is traded offshore in Singapore. That makes the SGX Nifty more cost effective.

· SGX Nifty is denominated in dollars. This makes it easier for the FPIs as their positions are also denominated in dollars and they don’t have to worry about currency hedging.

· Most of the foreign investors who trade in India are based out of Singapore or Hong Kong and since their time zones match, they find it easier to use the SGX Nifty.

· Lastly, it is extremely liquid and largely an institutional / corporate market and getting counter parties is hardly a problem.

In the last few years, there has been an attempt by the government and the NSE to reduce the off-shoring of Nifty futures trading and bring it to India. However, it remains quite popular among institutional investors.