The share price of Singapore Exchange fell as much as 8.8 per cent on Monday on news from late on Friday that India's main stock exchanges are to stop providing data to foreign index providers.
The joint announcement was a blow to SGX, which was the main foreign provider of India equity derivative products, notably a product tracking the benchmark Nifty 50 index.
It came a week after India's annual budget had announced plans to reintroduce long-term capital gains tax on equity investments – a move that some analysts predicted would hasten the migration of trading to foreign markets.
In their joint statement, the National Stock Exchange, the BSE exchange, and the Metropolitan Stock Exchange said the decision was taken because "the volumes in derivative trading based on Indian securities including indices have reached large proportions in some of the foreign jurisdictions, resulting in migration of liquidity from India, which is not in the best interest of Indian markets".
Existing agreements for licensing Indian securities prices for derivatives to be traded offshore "shall be terminated with immediate effect", subject to contractually agreed notice periods, the announcement said.
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