Deutsche Bank is replacing its global pricing engine for emerging-market currencies in London with one in Singapore, drawn by surging trading in Asia and the increasing importance of China's renminbi.
Locating new and more powerful computer hardware in the city-state will help the bank shave vital fractions of seconds off the time it takes to execute orders in the region, according to Singapore-based David Lynne, its chief of fixed income and currency operations in the Asia region.
The shift underscores the need to locate servers closer to customers amid the boom in high-frequency trading and the rise of the renminbi, which accounts for about 4 per cent of global currency volumes. It is also a win for Singapore, Asia's biggest currency trading hub.
"Singapore is growing as a major regional liquidity centre, and we along with some of our competitors are building capacity here to boost the speed of transmission into more Asian countries," Mr Lynne, who is also regional head of corporate banking, said in an interview last week.
"The upgrades we are making in new hardware in Singapore substantially increase our technical capability."
The city-state also has a speed advantage, he added. "It is faster than Tokyo in transmitting FX pricing into local Asia FX markets."
Singapore is ranked third globally behind Britain and the United States in the US$6.6 trillion (S$8.8 trillion) a day foreign exchange (FX) market, the latest triennial report from the Bank for International Settlements showed in 2019.
Deutsche Bank is also boosting its algorithm-based capacity for onshore renminbi trading in China, said Mr Lynne.
The bank is seeing an increase in demand from clients, particularly those in China, to change the invoice currency for transactions to renminbi. "That will continue to increase," he added.