Singapore Holds Firm As Third Largest Foreign Exchange Center

A survey that is conducted every three years has reconfirmed Singapore’s position as the third-largest foreign exchange center in the world. The number one foreign exchange center is London and New York takes the second place in the rankings.

The Monetary Authority of Singapore (MAS) and the Bank for International Settlements conducts the survey along with the central banks and authorities of 51 other jurisdictions in the country. The survey reviews the turnover of the OTC foreign exchange (forex) and interest rate derivatives markets in April every third year.

According to the survey results, in April this year the average daily trading volume in Singapore’s foreign exchange market was US$517 billion (S$705 billion), which was an increase of 35 per cent from the US$383 billion recorded three years ago. Singapore’s share of global foreign exchange volumes has gone up to 7.9 percent rising from 5.7 percent. The increase has been driven by the growth in transaction volume in currencies like the Chinese yuan, British pound, Japanese yen and Korean won.

In a statement, Jacqueline Loh MAS deputy managing director said

[The MAS] is working with the industry to further enhance price discovery, liquidity and transparency in our foreign exchange market by strengthening electronic trading capabilities and anchoring market infrastructure

Contributing to almost 48 percent of all transactions, foreign exchange swaps are the largest foreign exchange product segment in Singapore. The other two top products are spot trades and foreign exchange forwards. Commenting on the results, Andrew Ng, group head of treasury and markets at DBS Bank, said that Singapore was a major hub for global and regional banks. Additionally, the market has seen significant growth in non-banking financial institutions as well as treasury operations of large corporations. According to Ng, the rise in currency volatility has resulted in higher demand for hedging, and increasing volumes of swaps as a result of negative interest rates, leading to the rise in trading volumes.

JP Morgan Chase managing director Sudhanshu Sanadhya pointed out that the rapid advancement in technology had resulted in a shift towards non-stop electronic trading which has contributed to the growth in trading volumes. Leveraging technology has also enabled market participants to consolidate their trading transactions in major financial hubs across different time zones improving operational efficiency.

Sudhanshu Sanadhya said that Singapore was a natural hub for the Asia-Pacific region given the availability of high quality infrastructure, human capital and business environment. Ng stated that Singapore’s efforts over the years to build robust infrastructure had helped the country attract top companies who were willing to entrust their forex transactions to Singapore’s stock exchanges and help it become the third largest foreign exchange center in the world.

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