London Stock Exchange Group (LSEG) is raising its support for the forex non-deliverable forwards (NDFs) as it has announced the development of a fully-cleared NDF matching in Singapore.
The new matching services will be developed with support from the Monetary Authority of Singapore (MAS), which is determined to keep the city-state status of a forex hub. According to the Bank for International Settlements (BIS), Singapore is the largest FX center in Asia and the third largest globally.
“LSEG’s decision to launch cleared NDF Matching in Singapore underscores Singapore’s position as a price discovery hub,” said Lim Cheng Khai, MAS’ Executive Director of the Financial Markets Development Department.
“As a leading inter-dealer platform, LSEG’s venue is a key addition to our FX ecosystem and will play an important role in meeting Asian market players’ growing FX needs.”
Growing Demand for NDFs
Also, it came when the demand for forex NDFs are picking up steam among institutional investors. A BIS triennial FX survey found that the average daily volume of NDF transactions jumped from $134 billion in 2016 to $258 billion in 2019.
In addition, the LSEG highlighted that the latest move is the first phase of its plan to implement NDF and Spot Matching along with building streaming relationship venues in Asia. Further, it will ease access to the full book of liquidity in the venue for all participants.
“As a leading provider of FX and capital markets solutions, there has been strong demand for LSEG to enter the NDF CLOB market as participants look for greater choice in where they execute,” Neill Penney, LSEG’s Group Head of FX, said.
Moreover, it was the first FX venue to use entirely LSEG’s core technology.
Meanwhile, several other FX industry players have entered Singapore. Earlier this year, TP ICAP Group announced its plans to launch a Singapore-based electronic foreign exchange trading platform. Furthermore, Integral made its IntegralFX services available from Singapore’s SG1 data center.
James Pearson, LCH’s Head of ForexClear, said: “[NDF Matching in Singapore] exemplifies not only the focus on Asia for LCH, and across LSEG, but also the innovation possible within LSEG to create a trading platform wherein a broader array of market participants can decide on a pre-trade basis to clear their NDFs.”
