Singapore Looks to Establish itself as Global FX Trading Hub

A report published by Bloomberg on Thursday indicates that Singapore is making headway in its efforts to become a major hub in the foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term (FX) markets.

Regulatory authorities in the small country are encouraging firms to start building trading engines in the country.

Currently, FX trades have to be routed via locations, mainly Tokyo and London, outside of the city-state. That’s because most financial institutions have put their trading engines in those cities.

In doing so, it means that trading in Singapore can take a few milliseconds longer than it otherwise would.

And for the speed-seeking traders of the FX markets, those few milliseconds make a difference.

To ensure it can attract firms to its skyscraper sodden shores, the Monetary Authority of Singapore (MAS) has lent its support to firms looking to set up trading facilities in the small nation.

Those efforts have borne fruit. In the past couple of months UBS and Citigroup - two major financial institutions - have built FX trading systems in Singapore.

A long way to go

One major appeal for FX firms is the city-state’s location. Nestled between several emerging markets and major financial hubs, trading orders can be executed quickly.

Whether that will be enough to lure firms to Singapore remains to be seen.

Still, for any firms that are unsure, the MAS is apparently willing to give them a cash-based nudge in the right direction.

Currency platform provider Spark Systems, for example, was given financial support by the regulator to set up shop in Singapore.

The regulator has not disclosed how much it gave to the firm but did say that the firm was a part of a S$225 million ($166 million) plan, announced in 2017, to fund technology and innovation in the country's financial industry.

Last year, the top non-bank FX Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term provider XTX Markets launched an electronic FX (eFX) pricing and trading engine in Singapore. The company's effort was done in partnership with the Monetary Authority of Singapore (MAS),

Although it is now the largest FX trading jurisdiction in Asia, Singapore still lags far behind the US and UK.

Average daily FX trading is approximately $2.4 trillion in Britain and, for the US, the figure is just under $1.3 trillion. According to Bloomberg, Singapore's FX traders are averaging $517 billion a day.