Exploring NSE IFSC (NSE IX): Key Features, Offerings, and How to Invest via GIFT City
- Introduction
- What is NSE IFSC Exchange?
- Key Features of NSE IX
- Products Offered By NSE IFSC Exchange
- How To Invest In GIFT City Via NSE IFSC
- Significance of Investing in NSE IFSC
- Conclusion
Introduction
The Indian economy is expected to become the 3rd largest economy by 2027. India's domestic market is in full throttle and is expected to keep growing further.
As India expands its economic scope in the domestic markets, the need arises for a better-equipped infrastructure to back India’s presence in the global scenario. The answer is in the form of GIFT CITY - India's first International Financial Services Centre (IFSC). To support this ambitious vision, the NSE IFSC Exchange also known as NSE IX was launched—an international arm of the National Stock Exchange of India.
Well, stay tuned as we explore the NSE IFSC exchange, its offerings to investors, how to invest in exchange-provided products, and much more.
What is NSE IFSC Exchange?
NSE IFSC Exchange (also known as NSE IX) is an extended arm of the National Stock Exchange of India meant to cater to GIFT CITY. Located in GIFT City, Gandhinagar, Gujarat, this exchange offers several products for investment purposes within the SEZ (Special Economic Zone). NSE IX permits retail Indian investors and Non-Resident Indians (NRIs) to invest via different instruments. However, the scope of investors may vary based on the product offering.
After getting approval from SEBI, NSE IFSC was established by the Registrar of Companies on November 29, 2016. However, it was officially launched on June 15, 2017. Since then, it has enabled diversified investments in financial instruments like foreign equity shares, depository receipts, and derivatives. Several brokers have set up their operations in GIFT City to provide these investment opportunities to their clients.
Key Features of NSE IX
- Diversified Product Offering - NSE IFSC offers various products, including GIFT NIFTY, derivatives (like equity, commodity, currency), depository receipts, etc.
- Regulatory Framework - Located in GIFT City, NSE IX is regulated by IFSCA (International Financial Services Centres Authority).
- Clearing and Settlement - Here, the clearance cycle is managed by NSE IFSC Clearing Corporation Limited (NICCL).
- Retail & Broker participation - With multiple offerings, this exchange is open for several participants, including NRIs, Foreign Investors (FIs), and retail investors.
Products Offered By NSE IFSC Exchange
Below are the products offered by NSE IFSC Exchange at the retail and international level:
GIFT Nifty
Earlier known as SGX Nifty, GIFT Nifty is an index-based derivative wherein the Indian Nifty 50 index is the underlying index. It operates for 21 hours in two sessions (6.30 am to 3.40 pm and from 4.35 pm to 2.45 am). Overall, it provides cross-boundary investment opportunities for NRIs and foreign investors to invest in the products.
- GIFT Nifty 50 (top 50 listed Indian stocks on the NSE)
- GIFT Bank Nifty (tracks the 12 largest banks in India)
- GIFT Nifty Financial Services (comprises the 25 largest financial services companies)
- GIFT Nifty IT (25 largest Indian IT companies)
- GIFT Nifty Next 50 (consists of the next 50 stocks preceding the Nifty 50)
- Nifty Midcap Select (tracks 25 stocks within the Nifty Midcap 150 index)
NSE IFSC Receipts
NSE IFSC Receiptsallow investors to invest in the 50 US stocks* via Unsponsored Depository Receipts (UDRs). NSE IFSC Receipts mirror the performance of underlying stocks listed on the S&P 500 index. It permits NRIs (not for USA and Canadian residents) and retail Indian investors to diversify their global portfolio.
Investment is allowed via the LRS (Liberalised Remittance Scheme) with a remittance limit of up to $250,000 each financial year.
Derivatives
GIFT City provides a diverse range of derivative products designed to cater to global investors seeking exposure to Indian markets.
- Single-stock derivatives - It consist of 216 Indian stocks as the underlying instruments.
- Currency derivatives - Here, the following currency pairs are available. It includes the following;
- EURUSD - Euro-USD Currency Pair
- GBPUSD - Pound Sterling or GBP to USD currency pair
- JPYUSD - Japanese Yen to USD
- CHFUSD - Swiss Franc to USD
- AUDUSD - Australian Dollar to USD
- INRUSD - Indian Rupee to USD
- QINRUSD - USD to Indian Rupee
- Commodity Derivatives - It deals with Gold and Silver as primary commodities, following the LBMA (London Bullion Market Association).
Others
Apart from the above instruments, NSE IX also offers debt securities and bond contracts.
How To Invest In GIFT City Via NSE IFSC
The following steps explain how to invest in GIFT City-provided products via the NSE IFSC exchange.
- Open a DEMAT account in GIFT City (only for NSE IFSC Receipts)
- Choose a registered broker to open a Trading Account
- Complete the KYC requirements
- Remit Funds via LRS (for Retail Indian Investors)
- Fund your account and start investing
(Note: For retail investors or Resident Indians, it is necessary to consider the LRS limit.)
Significance of Investing in NSE IFSC
NSE IFSC exchange is a crucial platform for investors to benefit from investing in US stocks, currencies, derivatives, and commodities. It enables;
Access to Global stocks
With NSE IFSC receipts, you can access US stocks and prominent companies. It also enables fractional ownership through these investments.
Simplified Investment Process
Such platforms eliminate the old constraints and make international investing accessible in a simplified manner via registered brokers.
Cost efficiency
Zero Securities Transaction Tax (STT), Commodity Transaction Tax (CTT), and stamp duty apply to GIFT City-related transactions.
Regulated and secure environment
Operating under the IFSCA guidelines, the exchange's transactions and related trading (plus clearance) are regulated within a compliance framework.
Conclusion
NSE IFSC (or NSE IX) exchange offers a seamless and cost-effective gateway for Indian and foreign investors to access global markets via GIFT City. With features like trading in stocks, extended hours, and tax benefits, one can easily diversify their portfolio beyond domestic assets. Moreover, backed by a strong regulatory framework and integrated with the LRS route, NSE IFSC is a strategic step toward global investing from Indian soil.
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