Rupee trading onshore has been shrinking at the expense of offshore market, with volumes in London topping those in India's financial capital Mumbai.
As
India works to bring some of the burgeoning offshore rupee trading
back home, the exchange that will likely spearhead the move says it’s
prepared to cut trading fees to zero to take on overseas rivals.
The
India
International Exchange (IFSC) Ltd., also known as India INX,
plans to waive commissions initially, a strategy it used to bolster
liquidity in its equity and gold derivatives contracts.
“We
will compete with lowest-cost access,” V. Balasubramaniam, chief
executive at the bourse based in the tax-incentive zone in the GIFT
City, said in an interview. “For us, the cost of running a market
is much lower as manpower and infrastructure costs at the IFSC are
small.”
Trading
charges at the Dubai Gold & Commodities Exchange range from $0.03
to $0.1 per contract, per side on various rupee-related contracts,
according to its website. The Singapore Stock Exchange charges
0.0075% of traded value as fees that exclude clearing costs.
Rupee
trading onshore has been shrinking at the expense of offshore
market, with volumes in London topping those in India’s financial
capital Mumbai. In a bid to boost local volumes, the Reserve Bank of
India this month allowed trading in rupee on venues like the IFSC and
permitted banks to freely share forex rates with non-residents.
Further regulatory approvals are awaited before trading starts.
The
GIFT City, located in the western state of Gujarat -- the home state
of Prime Minister Narendra Modi -- has been conceived as a financial
hub to rival centers like Singapore and Dubai. Investors based there
are exempted from levies on buying and selling of securities and
capital gains tax for non-residents.
INX
India, a unit of the BSE Ltd., is currently the biggest exchange in
GIFT City. The National Stock Exchange of India Ltd., the nation’s
top equities bourse, also has a unit in the zone.
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