India International Exchange (India INX) which has been inaugurated by Indian Prime Minister today, shall start functioning from 16th Jan 2017. The‘India International Exchange’ will trade in all the products in line with other exchanges in the world such as Singapore, Hong Kong, London, New York etc. i.e currency, equities, commodities derivatives. The exchange shall function for 22 hours on daily basis beginning with the opening of Japanese stock exchange and will close with the closing of Exchanges in the US. INX shall aim to grab a pie of India’s $48 billion offshore banking activities from Singapore, Dubai and Hong Kong exchanges. The India International Exchange set by BSE has been set up on the first floor of the 16-story “Hiranandani Signature” tower which is the first commercial building to come up in the international financial services centre (IFSC ) zone of the business district named GIFT City campus.
Gujarat International Finance Tech-City or GIFT is an an upcoming central business district between Ahmedabad and Gandhinagar. Its aim is to provide high quality physical infrastructure ranging from water, electricity, gas, water, cooling, roads, telecoms and broadband with a view that finance and tech companies can relocate their operations from other crowded IT and financial centres and GIFT could be modeled on destinations like Hongkong. It will have a special economic zone (SEZ), international education zone, integrated townships, an entertainment zone, hotels, convention center, an international techno park, Software Technology Parks, shopping malls, stock exchanges and service units.
2015 budget had announced waiver of tax on transaction in equity, commodity and currency in GIFT city in addition to zero tax on dividend distribution and capital gains. Also, the minimum alternate tax for companies re-locating there was halved to 9% from 18%. The Exchange, which will operate like a tax free island and conduct dollar denominated trades with trading and brokerage firms setting up their back office operations in the domestic center of GIFT city, which however is not tax free. Financial services companies can fund a subsidiary in GIFT to the extent of 400% of their net worth through the overseas direct investment route.
Finance firms setting up units in Gift City this will pay a reduced tax valid for special economic zones and can more easily offer foreign-currency loans to Indian companies abroad, overseas nationals and foreign companies. Commercial banks operating in the area will be allowed to offer structured products according to Reserve Bank of India rules.A lot of business from India is going to centers like in Dubai and Singapore and with this Government aims to provide a enabling environment for these activities to be done in India itself.
India International Exchange or India INX shall start trading single stock and equity index futures on Jan. 16. Trading can also be done in gold, silver, crude and other base metals and currency segment. The exchanges plan to launch derivative contracts of India’s popular equity indices too in GIFT. The exchange will start trading in its first product Sensex-50 an index derivative. It will add gold, silver, copper, oil and the rupee thereafter. Depository receipts and bonds would be offered once the required infrastructure has been set up.
BSE will be investing another Rs 500 crore in this exchange which is the world’s fastest stock exchange. It has an order response time of four microseconds (which will be much better than international exchange at Singapore which has a response time of 60 micro seconds. “It also plans to have reciprocity pacts with some other international exchanges. The exchange shall attempt to capture the market share lost by the country to equity-futures in Singapore, currency derivatives in Dubai and structured products in Hong Kong. Currently if any Indian company wants to raise funds in foreign currency, then It need to contact foreign exchanges. Now this procedure will become inexpensive and faster. The companies in India that wants to go global will benefit from this move.
INx will be initially trading for 22 hour period with start of trading at 4 am, to synchronize with opening of Japanese market and close when the exchanges in USA close. While initially BSE is moving in through INX, NSE has also plans to start operations in near future. Both the BSE and NSE are allowed to launch derivative contracts based on foreign assets. The exchanges expects that Currency and commodity segments will be expected to be crowd pullers.