Explore What’s Behind Singapore’s Growth in e-FX

Key Takeaways

• International investor demand and a robust base of buy-side clients fuel Singapore's e-FX growth
• Geopolitical stability and regulatory frameworks help create a conducive environment for digital FX
• Singapore offers FX market participants innovative trading technology, skilled workforce, and a strong financial ecosystem

In a recent piece for e-Forex Magazine, Qian Ying Goh, Head of Institutional FX Sales for StoneX Pro, Singapore, offered her insights into what's behind the dynamic growth experienced by Singapore's FX market.

The article highlights the unique elements and situation that have Singapore poised to dominate e-FX in the region. Stable regulation and a strategic location are only two reasons institutions, regional banks, and market stakeholders flock to set up shop there.

Singapore enjoys a robust financial system, employs innovative trading technologies, and occupies a strategic location in the region. The continued growth of Asian economies and rapid economic expansion in the area from China and India have drawn global investors. The demand for efficient FX execution pushes the need for ever more sophisticated e-FX platforms.

The Monetary Authority of Singapore (MAS) is responsible for maintaining an upward growth trend. As such, the MAS' progressive regulatory framework is designed to create a vibrant environment for new and innovative fintech.

With Asia's populations mostly young and digitally connected, new and more sophisticated financial products, like cross-border transactions, are being sought.

Goh stated, "At StoneX, we've observed FX trading in Singapore shifting towards more complex FX instruments such as forwards, swaps, and options as corporates and financial institutions look for more advanced instruments to hedge their currency exposure and occasionally take some exposure to the market."

The article explains that service providers in the region have invested heavily in tech, and infrastructure has undergone significant upgrades, offering transactions with improved performance, better market data, and custom order types.

Goh added, "We've seen a significant increase in solutions for digital assets and global payments in the past 24 months, and this growth is expected to continue."

When asked about the impact of America's move to T+1 on Singapore, Goh said, "Our FX business continues to grow at a rapid pace in Singapore, and it's unclear if this is in any way connected to T+1. We suspect that this growth is due instead to the development of the wider APAC market and the increasing penetration of StoneX across all asset classes in the region."

MAS recently launched the Financial Services Industry Transformation Map 2025 (ITM) to create 3-4,000 jobs and achieve annual growth of 4-5% to add further stability and increase competitiveness. The move bolstered the city-state's position as the preferred regional market hub.

Goh commented on the ITM. "Singapore can lean on attributes such as a stable political system, which is particularly appealing in today's political climate, a globally respected regulatory regime in MAS, and a positive attitude towards technology and digital adoption," she said.

"As an example, in 2020, the Singapore government launched a special legal structure that provides tax incentives for hedge funds, venture capital, and private equity firms to encourage them to establish a presence in Singapore," she continued. "As of the end of 2022, over 600 financial services companies had taken advantage of the program. This growth in the financial services ecosystem will almost certainly have a positive knock-on effect on FX trading."

By developing a highly skilled workforce and attracting top global talent, the country is creating partnerships and international collaborations to stay well-positioned as a leading global FX trading hub, regardless of global competition.

According to Goh, Singapore's FX future is bright, with no sign of fading. "The Singapore government is expected to continue fostering a favorable business climate to attract financial services firms to the city," she said.

Read the full article here.