Although most high-frequency traders (HFTs) prefer to set up shop close to stock exchanges to enjoy better latency, a few are
willing to sacrifice proximity to save a few bucks.
Two HFTs have already established their offices at the GIFT City (Gujarat International Finance Tec-City) IFSC while many more are likely to follow suit.
IFSC stands for International Financial Services Centre.These HFTs, which deploy algorithmic and quant strategies, will continue to be regulated by the Securities and Exchange Board of India (Sebi) and trade on domestic exchanges.
The shift to GIFT City, according to industry experts, is to save a significant amount on stamp duty paid on broking transactions.
As the number of trades executed by HFTs is higher, the transaction cost also surges.
With the stamp duty refund, the benefit can run into crores, an expert said.
Legal and tax experts said that a Gujarat government scheme has prompted this shift.
Under this, 100 per cent stamp duty paid on share broking transactions is refunded to eligible brokers.
Though tax benefits and the stamp duty benefit were notified nearly five years ago by the Gujarat government, it is only now that it has caught the eye of HFTs.
GIFT City provides an opportunity to stockbrokers to save on stamp duty, unless the end client is a foreign investor.
This avenue is now becoming popular, considering that the refund mechanism to reclaim stamp duty has become streamlined and appealing to HFT players where stamp duty becomes a key cost component, said Rajesh Gandhi, partner at Deloitte Haskins & Sells LLP.
Jump Trading and Tower Research are two such firms that have set up their offices in the GIFT City.
While Jump already has an office in Mumbai, Tower's first office in India was set up in Gurugram, Haryana.
Both these HFTs have set up their GIFT City offices in the past year, said experts.
Emailed queries to these two HFTs remained unanswered till press time.
Sources said multiple HFTs have shown interest and are considering setting up shops based on their analysis of opportunities and benefits in the financial hub.
The Government of Gujarat, through multiple notifications and circulars, has introduced a stamp duty refund incentive to encourage share brokers to set up and operate their registered offices in GIFT City.
This initiative is part of a broader strategy to develop it as a premier international financial services hub by reducing transaction costs and making it attractive for stockbroking activities, said Suresh Swamy, partner at Price Waterhouse & Co.
To avail themselves of the benefits, HFTs need to register their share-broking offices within GIFT City and carry out actual trading operations.
Further, they must employ a minimum number of full-time employees, including those in compliance and operation roles, and maintain connectivity and infrastructure requirements, such as disaster recovery setup.
All traders and dealers must be physically present within GIFT City.
For entities using colocation, the session IDs must be mapped to GIFT City, and all associated trading infrastructure including terminals, API IDs, and related systems must also be located within GIFT City, said Gandhi.
Earlier in May, Sebi allowed stockbrokers to operate in GIFT City IFSC without taking its prior approval.
Stockbrokers proposing to undertake securities market-related activities there are permitted to do so under a separate business unit of the entity itself.
© 2025