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Author: Anatol Antonovici
Senior Reporter
Anatol Antonovici

Singapore Banks Note an Increase in Forex Trading Volumes

During the recent years, banks operating in Singapore noted increasing foreign exchange (Forex) trading volumes, which were mainly driven by strong economic growth in Asia, local news site The Business Times revealed in a report. Since Singapore continues to impose itself as a global Forex hub, analysts expect the Forex trading volumes to remain strong, at least for the foreseeable future.

Singapore Became a Forex Trading Centre

Top executives working in the banking sector revealed to The Business Times that local banks would continue to note increased FX volumes given that the country promotes itself as a regional and even global FX center.

Lim Wee Kian, managing director and head of Forex at The Development Bank of Singapore (DBS), reportedly said:

Singapore is fast evolving into a natural hub for FX in Asia with the many initiatives to promote FX trading in the region, coupled with regulatory support to encourage key market participants to set up their pricing and matching engines in Singapore.

In 2018, DBS Bank said in its financial report that its consumer banking and wealth management income gained 21% to 5.65 billion Singapore dollars based on improved results in all product categories. The massive growth was recorded despite a decline in the unit’s income during the last quarter of the year.

In the Forex spot market, DBS saw significant growth, with spot volumes for 2016, 2017, and 2018 surging by 20%, 28%, and 45% in annual terms, respectively, according to Lim. He went on:

Digitisation of DBS’ FX transactions was a key driver of the strong growth in FX volumes, which started from a lower base, coupled with the strong traction from all remittance corridors of our consumer banking group and wealth management business.

At the moment, DBS Bank is the largest bank in South East Asia and among the largest in Asia by assets, which totalled 518 billion Singapore dollars as of December 2017. The company dominates financial sectors like consumer banking, asset management, treasury and markets, securities brokerage, and bonds in Singapore and Hong Kong.

Wealth Management Sector Also Expands

Besides the increase in Forex trading activities, the wealth management sector in Singapore also noted a significant growth, according to Jose Luis Yepez, Citi’s head of Forex and local markets, Asia-Pacific, Singapore.

Data from Asian Private Banker revealed that, even though assets under management declined last year from $1.69 trillion to $1.63 trillion, private banks in Asia have still noted a 6.9% compounded annual growth since 2014.

Yepez commented:

FX trading activities and volumes in Singapore have increased over the past few years due to several reasons including the strong economic growth of Asia, and a larger share of global investment flows into the region.

Singapore to Maintain Its FX Hub Status

Singapore’s main financial regulator, the Monetary Authority of Singapore (MAS), which also acts as the central bank, aims to turn the country into a global Forex price discovery and liquidity centre, as stipulated in its Financial Services Industry Transformation Map, first released in 2017.

According to the document, Singapore is working to become a:

  • Leading international wealth management hub - MAS aims to make the country a centre of excellence for wealth management innovation.
  • Asian hub for fund management and domiciliation - the regulator relies on its external fund management programme to accumulate enhanced asset management capabilities in Singapore. Also, the Singapore Variable Capital Company framework will allow the country to become a regional fund domiciliation hub.
  • Global Forex price discovery and liquidity centre in the Asian time zone - Currently, Singapore is the third largest Forex centre at a global level. As Asia’s economy grows and attracts more investors, MAS will push key players to set their matching and pricing engines here.
Meet The Author
Anatol Antonovici
Anatol Antonovici
Senior Reporter

Anatol has been writing for our news site for a year and is the newest member of our team. While he’s new to us, he’s certainly not new to trading with over 10 years’ experience being a professional financial journalist and working in the markets.

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