Tata Consultancy Services, which manages more than 40 percent of capital market infrastructure solutions, has won a contract from the Singapore Stock Exchange to run trading and settlement platforms for the upcoming SGX Nifty Exchange at the International Financial Services Center in Gandhinagar.
To become known as NSE IFSC-SGX Connect, the platform will help Singaporean exchange members trade convenient derivatives on the NSE IFSC, which is expected to be operational from the middle of the year.
Convenient derivative contracts on the SGX are among the most traded as they are used by global investors to hedge their exposure to India. SGX Nifty is a joint venture of NSE and Singapore Exchange.
SGX’s five-year contract is a “significantly large order in terms of contractual value,” R Vivekanand, global head of BFSI platforms and products at TCS, told PTI on Wednesday without quantifying the contractual value.
TCS will provide the foundational platform for the Gift Data Connect program, he said, adding that the platform will run on its BaNCS Securities Trading solution, which now carries more than 40 percent of domestic trades.
The contract will also include providing maintenance services, including the front office, risk management, back office clearing and settlement modules, he noted.
SGX has formed a dedicated vehicle – SGX India Connect IFSC or SGX ICI – to run NSE IFSC, which will go a long way in bringing liquidity to the market, Vivekanand said, adding that the exchange will act as an executive-cum-clearing broker with trading and clearing membership of NSE IFSC.
Although SGX Connect will be managed through a dedicated vehicle, traders will continue to trade the same way they did when the SGX platform was based in Singapore, the only difference is that trades will start and end on TCS solutions and then go to the barter solution at Gift City, explained Vivekanand.
He said that the platform can process 2 lakh trades per day from 12 very large SGX institutional brokers. But this doesn’t mean it can’t handle more volume, as TCS software running NSE handles millions of trading volume, he added.
Vivekanand said for TCS that BFSI is the largest business and revenue vertical, contributing more than 40 percent of revenue. In FY21, the BFSI vertical came in with annual sales of $8.864 billion. Within BFSI, insurance leads with about 40 percent of revenues and margin stocks, followed by capital markets and banking with 30 percent each.
As much as 40 percent of the volume of the domestic market in terms of order management and trading solutions/settlement is done on the TCS platform, while the software runs as many as 32 exchanges worldwide including London Metal Exchange, Europe Clear, TMX Canada among others , most MENA markets and South African exchanges, Singaporean and Manila exchanges, making TCS the world’s largest independent provider of market infrastructure solutions.
TCS will be testing and training the SGX members in Singapore from the beginning of this month. It hopes to operationalize the first phase of the NSE IFSC-SGX program in April and to complete the second and final phase by June-July.
The project is significant given that the Prime Minister’s Office oversees the exchange’s launch process, as its success is critical to meeting the government’s goal of creating a larger pool of liquidity in the onshore market. Better liquidity in the NSE IFSC means convenient contracts are traded onshore and earnings remain within the country.
Some of its notable global clients include LCH London, TMX Canada, Nasdaq Dubai, Euroclear, New Zealand Exchange, Strate South Africa, Philippines Depository, and Kuwait Clearing Company.
The NSE, BSE, National Securities Depository, MCX, Metropolitan Exchange Central Securities Depository, Clearing Corporation and regulators RBI and Sebi use TCS solutions.
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