British hedge fund QRT first to set up shop in GIFT SEZ

High-frequency trading firm to get tax sops on derivative trades

- KHUSHBOO TIWARI

London-headquartered high-frequency trader (HFT) Qube Research & Technologies (QRT) is setting up operations in GIFT City, providing a boost to the country’s only International Financial Services Centre (IFSC), which aims to position itself as a hub for global trading firms.

The British fund — often described in market circles as a secretive hedge fund due to its low public profile and proprietary trading operations — has got in-principle approval from the IFSC Authority (IFSCA) to register as a fund management entity. It will be the first global HFT to set up in the special economic zone (SEZ).

“In addition to our Mumbai office, we are in the process of establishing an office in GIFT City,” QRT confirmed, but did not provide further details. Emailed queries sent to the IFSCA remained unanswered at the time of publication.

QRT is expected to launch a Category III fund, which allows undertaking sophisticated trading strategies. By registering in the international zone of GIFT-IFSC, QRT will be able to enjoy tax exemption on income from derivatives trading and benefits on securities transaction tax, said industry players. While some HFTs have set up office in GIFT City, they operate from the domestic tariff area (DTA), benefiting from refunds on stamp duty paid on share-broking transactions. Sources added that HFTs in the DTA register as stockbrokers and invest through their proprietary books.