GIFT City Gets Buzzing: JP Morgan Sets Up Derivatives Unit - Why It Is Significant

JP Morgan Chase &Co, has set up a unit to develop derivative products in India's newest international hub. This venture is one of a kind for any bank, and has not been initiated before.

About The Offerings

The US based bank will provide support to products and offerings developed in Gujarat's GIFT City, or Gujarat International Finance Tec-City, reported Bloomberg. The bank will hire five people in the next 12 months to lead the project. It will provide a much needed support to GIFT City's efforts to position itself as an alternative trading hub, to the usual locations of Singapore and Dubai. Other banks, like HSBC Holdings Plc, Sumitomo Mitsui Banking Corp, and BNP Paribas have already opened their branches in GIFT City to avail services like derivates trading, acquisition financing, and providing services to wealthy customers. These services are not allowed in the rest of the country, but GIFT City being a Special Economic Zone (SEZ) offers exemptions.

Existing Business Unit

JP Morgan has opened international business unit in GIFT City in 2022 where it’s allowed to provide services to its group entities outside the free trade zone without adding any liabilities to its balance sheet, under exemptions permitted by the regulator for economic zones, Bloomberg reported. GIFT City is an SEZ where regular tax and services laws are relaxed.