BSE launches Sensex Derivatives at GIFT City, opens door for foreign traders

Mumbai: The Bombay Stock Exchange (BSE) on Monday introduced Sensex derivative contracts at the International Financial Services Centre (IFSC) in GIFT City, Gujarat which offers foreign investors to trade India’s benchmark equity index without currency conversion risks.

These contracts, which are denominated in US dollars, will be traded on the India International Exchange (India INX), BSE’s dedicated stock exchange for GIFT-IFSC.

The minimum investment for Sensex derivatives is set at $1, and the final settlement day for each contract will be the last Tuesday of the contract month.

The contracts will follow a three-month trading cycle, with settlements carried out in cash, in US dollars.

With a 22-hour trading window, these contracts allow international traders to engage with Indian markets across different time zones.

GIFT City offers several tax benefits, including exemptions from securities transaction tax (STT), capital gains tax, and stamp duty.

The launch of these derivatives aims to provide global investors with a tax-efficient way to participate in the Indian market.

At the launch event, BSE Managing Director and CEO Sundararaman Ramamurthy said that the competitive environment of GIFT City will be an advantage for global investors.

India INX, BSE’s international exchange, recorded an average daily turnover of $206 million in FY24-25.

Meanwhile, the National Stock Exchange (NSE) already offers Nifty-based derivative contracts at GIFT City through a partnership with the Singapore Exchange (SGX).

In July 2023, the SGX Nifty was migrated to NSE’s International Exchange (NSE IX) and was rebranded as GIFT Nifty.

The GIFT Nifty has seen rapid growth, with an average daily turnover reaching $95 billion in January.

Meanwhile, at the closing bell, the BSE Sensex had dropped 319.22 points, or 0.41 per cent, to settle at 77,186.74, while the Nifty was down 121.10 points, or 0.52 per cent, to close the trading session at 23,361.05.

The decline in the Indian share market is due to US President Donald Trump’s decision to impose a 25 per cent tariff on imports from Canada and Mexico, along with a 10 per cent duty on Chinese goods.

Trump argues that these measures are necessary to protect American borders and curb illicit activities.

–IANS