In a joint initiative, India\u2019s three prominent stock exchanges - National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and Metropolitan Stock Exchange of India (MSEI) on Friday announced its decision to stop trade of derivative contracts based on the Indian indices on overseas bourses. These exchanges, as a result, will stop their licensing agreements with Singapore Exchange (SGX), CME Group Inc., Taiwan Futures Exchange and Osaka Securities Exchange. This comes at a time when the global sell-off in equities infused a major turmoil in Sensex and Nifty last week. However, volatility existent in the markets, at present, should not be seen as a reason for termination of trade of Indian indices on foreign bourses, Vikram Limaye, CEO, NSE told the Economic Times. In fact, the decision has been made to ensure liquidity stays in the country and not shift to trading hotspots such as SGX which have since long attracting a good number of global investors offering lower margins and cost of transactions, Vikram Limaye told the Economic Times. \u201cVolumes in derivative trading based on Indian securities including indices have reached large proportions in some foreign jurisdictions, resulting in migration of liquidity from India, which is not in the best interest of Indian markets,\u201d said the statement issued by the trio. Migration of liquidity However, this move may affect revenues, but it\u2019s the right thing to do at present, Vikram Limaye told Bloomberg. On Saturday, Sebi chairman Ajay Tyagi reiterated the similar argument saying such a move shouldn\u2019t be viewed as a \u2018retrograde step.\u2019 NSE signed the agreement with SGX in March 2000 that allowed it to trade futures and options based on the Nifty 50 Index. In a reply to the move, SGX on Sunday issued a statement in which it said it plans to develop \u201cIndia-access risk management solutions.\u201d cThe contract contributed a third of futures volumes on the NSE. Even before its launch, NSE had expressed reservations as NSE chief Vikram Limaye had raised concerns that such a move by SGX would enable liquidity to shift out of the Indian stock markets. GIFT as an alternative Now, after licensing agreement with the foreign exchanges has been terminated, the trio expects that the interest of the investors will increase in the exchanges established in India\u2019s first international financial service centre (IFSC) at Gift City. On February 1, Finance Minister Arun Jaitley said, \u201cInternational Financial Service Centre (IFSC) at Gift City, which has become operational, needs a coherent and integrated regulatory framework to fully develop and to compete with other offshore financial centres. The Government will establish a unified authority for regulating all financial services in IFSCs in India.\u201d The budget 2018 exempted foreign portfolio investors from short-term capital gains tax on trades in such instruments at IFSC, bringing it on a par with attractive trading destinations such as Singapore and Dubai. Vikram Limaye had told BloombergQuint that the regulator and exchanges have taken a call to create an offshore jurisdiction in IFSC at GIFT City. \u00a0Since destinations such as Singapore and Dubai offer contracts which are dollar-denominated and offer advantages in terms of taxation, foreign investors use such contracts to hedge their exposure in the cash-segment. BSE Sensex was trading at 34,230.37 up by 0.66 percent. NSE Nifty was trading at 10,515 up by 0.57 percent at the time of reporting.