NSE IX has built a platform that will allow retail investors to buy and sell global stocks. V Balasubramaniam, MD & CEO, NSE IX (NSE International Exchange) tells Kushan Shah that investors will also be allowed to buy stocks in fractionalised form like in case of mutual funds. Excerpts:
What are the operational benefits that domestic investors can get in NSE IX?
Currently, domestic investors do not have many choices to invest globally. Large investors have access to foreign brokerages, but smaller brokers or middle-class people do not have access to them. Modern middle-class investors are aspirational and wish to invest globally. The newly launched NSE IX Global Access platform provides a broker-dealer setup for such investors.
It also provides them with an app and website through which people can open online accounts through digital KYC to invest globally. Investors will be able to remit their amount from their bank account to GIFT City to buy and sell international stocks. Besides this, they can also buy stocks in a fractionalised form (based on their investment amount, similar to units of a mutual fund) through which they can invest a smaller amount like $10 or $100 in international stocks.
The volumes on the GIFT Nifty recorded the highest ever 1-day trading volume recently. What has led to this sharp rise? How do you think the GIFT Nifty has contributed to market efficiency?
The last few weeks have been very volatile due to tariff and geopolitical conflicts which has increased the international demand for derivatives for hedging. This has been the major driver for high volumes in the GIFT Nifty. It also contributes to market efficiency as it allows foreign investors who are invested in India or have a view on the Indian markets to express themselves through a financial product.
Which new operational benefits is NSE IX adding to benefit investors?
We are looking at listing of stocks through NSE IX. We are also targeting some international brokers who may want to set up operations in GIFT City. Besides this, we expect more derivatives like single stock future to become more liquid. There are also efforts to make index derivatives more popular among efforts.
NSE IX allows foreign investors to become EFIs (Eligible Foreign Investors). What are the benefits of becoming an EFI?
EFI is a broader term compared to an FPI. There are many investors who want to invest in India only through the GIFT City route, who can enter through the EFI route. EFIs can invest without having a PAN, opening a bank account or appointing a custodian. They can simply remit the money to the broker’s account or the clearing member’s account and invest in products offered by NSE IX.
How do you see India as an investment venue for foreign investors following the recent geopolitical events?
India is always going to be an attractive investment avenue. We are soon going to become the third largest economy which means that more foreign global investors who wish to have a global portfolio will want to have allocation to the Indian markets. India’s growth story remains intact and as our economy goes from $5 trillion to $10 or $20 trillion, the markets will grow in size, attracting more investors.
Which new offerings can investors expect from Nifty IX in the near future?
We are looking at more tie-ups with international exchanges and create collaborate arrangements with them on cross listing and dual listing. We want to have more innovative products and are also coming up with a new index through our subsidiary. There are also talks with the regulator through a working group about a segregated nominee facility which, if approved by the regulator, will allow the well-recognized and reputed brokers and clients under them to do KYC separately. They can invest based on the verification process of their market intermediary.