V. Balasubramaniam, the Managing Director and CEO of NSE IX, has outlined an ambitious strategy to transform the exchange into a pivotal debt and equity platform serving 25-30 markets worldwide. This expansion is central to positioning India's Gujarat International Finance Tec-City (GIFT City) as a significant regional and international financial hub.
GIFT City's Growing Momentum
Since the relocation of Nifty derivatives trading from Singapore to GIFT City, NSE IX has experienced substantial growth in volumes and trading activity. Balasubramaniam reported a 30-50% increase in volumes by March compared to the previous year, with an average daily trading volume exceeding $15 billion. This surge indicates a strong offshore interest in India converging on GIFT City, complemented by a rise in new fund launches within the financial ecosystem.
Strategic Global Expansion
NSE IX aims to be the preferred financial partner for both inbound and outbound investment and hedging needs. While initially focusing on inbound investments, the exchange recently launched NSE IX Global Access, a fully owned subsidiary. This entity is the first to secure a global access provider license, enabling direct investments in international markets. The platform has already made US markets accessible and plans to integrate additional markets within months, targeting a total of 25-30 diverse jurisdictions.
Facilitating International Investment
The regulatory framework established by the International Financial Services Centres Authority (IFSCA) is designed to be comprehensive, covering all aspects of global access provision. This framework allows intermediaries to obtain the necessary licenses, and NSE IX is actively negotiating to ensure competitive costs, promising to pass these benefits on to its customers as the platform scales.
Expanding Footprint and Listings
GIFT City's vision is to evolve into a top-tier international financial center. NSE IX has successfully served as a hub for Indian companies raising capital overseas, particularly in bond fundraising. The focus is now shifting towards equities and broadening its international reach.
- Last year, NSE IX facilitated the first foreign bond listing for DFCC Bank in Sri Lanka.
- Alliance, a major Sri Lankan NBFC, also listed its bonds on the exchange.
- Cyprus-based Ellinas Finance recently became the first foreign company to list on NSE IX, leveraging Cyprus as a gateway to Europe. This followed a Memorandum of Understanding signed with the Cyprus Stock Exchange.
- Discussions are underway with other large Cypriot banks for potential listings.
Challenges Ahead for Domestic Equity
While the international expansion is progressing, Balasubramaniam noted that certain aspects for domestic equity raising in GIFT City still require streamlining. A significant challenge remains the implementation of video Know Your Customer (KYC) procedures for non-resident investors. Developing a robust methodology to validate foreign investors using passports or local tax identification numbers is crucial for attracting broader subscription from this segment.