Singapore remains the largest foreign exchange centre in the Asia-Pacific region and third-largest globally, after London and New York, according to a new survey.
Results of the poll of global foreign exchange and over-the-counter (OTC) derivatives markets, which is held every three years, were published yesterday by the Bank for International Settlements.
The Monetary Authority of Singapore (MAS), together with the central banks and authorities of 51 other jurisdictions, conducted a survey of turnover in the OTC foreign exchange (forex) and interest rate derivatives markets in April.
The infrastructure that Singapore has built over the years to attract firms to conduct their foreign exchange and treasury business here has paid off.
MR ANDREW NG, group head of treasury and markets at DBS Bank.
It found the average daily trading volume of Singapore's foreign exchange market was US$517 billion (S$705 billion) in April, up 35 per cent from the US$383 billion of three years ago.
Singapore's share of global foreign exchange volumes has grown to 7.9 per cent in 2016, from 5.7 per cent three years ago.
This expansion was driven chiefly by growth in currencies such as the Chinese yuan, Japanese yen, British pound and Korean won.
Foreign exchange swaps made up the largest traded foreign exchange product class in Singapore, accounting for 48 per cent of all trades, followed by spot trades and foreign exchange forwards.
MAS deputy managing director Jacqueline Loh said the banking regulator "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".
Mr Andrew Ng, group head of treasury and markets at DBS Bank, said Singapore is a hub for global and regional banks, while non- bank financial institutions and corporate treasury centres have also grown significantly over the years.
He noted that rising currency volatility leading to more hedging, and higher demand for swaps because of negative interest rates, contributed to the lift in trading volumes.
JP Morgan Chase managing director Sudhanshu Sanadhya, who is head of South Asia currencies and emerging markets and G10 FX spot, said technological advances have led to a marked shift towards round-the-clock electronic trading, driving the surge in volumes.
Technology has also enabled market players to consolidate their trading activities in major financial centres across different time zones.
"Singapore, with its exceptional infrastructure, human capital and business environment, is a natural foreign exchange hub in the Asia- Pacific region," he added.
Mr Ng also noted that "the infrastructure that Singapore has built over the years to attract firms to conduct their foreign exchange and treasury business here has paid off".