By Vivek Shankar

Quest for the best: Exploring Singapore’s increasingly attractive e-FX trading ecosystem

July 2023 in Regional Perspectives

Singapore’s growth as a major FX hub in Asia continues unabated. The BIS Triennial Survey released in 2022 reported that average daily trading volumes rose to $929 billion (USD), an increase of 45% from April 2019. Singapore is now the third-largest FX trading centre globally and the largest in Asia, accounting for 9.5% of global FX volumes.

“Singapore is a regional hub for innovation in fintech and has a rich history of fostering an environment that enables progressive change in the industry,” says Adrian Rymill, Head of eFX Sales APAC at State Street Global Markets. “Geographically, we are at the epicentre for the broad region from Tokyo and Wellington in the east, to Mumbai and UAE in the West. Whilst the share of business dealt electronically continues to increase, nothing replaces the value of being able to travel to get in front of clients to deepen relationships and understanding.”

“Singapore is very well placed compared to most other large financially developed cities in Asia, on two fronts – latency and low to no ecological disruptions,”

Lee Beng Hong

In addition to geography, the Monetary Authority of Singapore’s (MAS) initiatives have played a central role in Singapore’s growth. Launched in 2018, the Foreign Exchange E-trading Ecosystem strategy enticed banks to set up pricing, trading, and matching engines in the city-state. 

The initiative has clearly worked, with the likes of Barclays, Deutsche Bank, and JP Morgan Chase among the banks that have set up operations in Singapore.

Lee Beng Hong, Head of Fixed Income, Currencies and Commodities, SGX Group, notes another critical aspect of Singapore’s geography. “Singapore is very well placed compared to most other large financially developed cities in Asia, on two fronts – latency and low to no ecological disruptions,” he says. “MAS has been a forward-looking and welcoming regulator, both in terms of providing a framework and support if required, for financial institutions and market infrastructure providers looking to set up technology infrastructure in Singapore.”

Growth infrastructure and trading patterns

Gareth Bridges, Director, Financial Services, Asia-Pacific at Equinix, echoes Rymill’s views when asked about Singapore’s attractiveness as an FX trading hub. “Singapore is the primary market for foreign exchange (FX) and bond price discovery in Asia-Pacific,” he says. “Spot trading accounted for just ~25% of Singapore’s total FX trading volume, with a significant volume of the overall growth contributed by FX derivatives. FX market participants utilise reliable, low-latency interconnection at Equinix to enable quick, secure, and direct access to key FX trading infrastructure.”

Low latency has proved a critical building block for Singapore’s eFX growth. Strong digital connectivity and infrastructure investments have ensured low latency times between the city-state and other trading hubs. In turn, these initiatives have attracted several stakeholders in FX, creating an ecosystem institutions can rely on.

“The CFTC approval of Recognized Market Operators authorised within Singapore as exempt from CFTC swap execution facility registration requirements speaks volumes to the confidence in Singapore,”

Adrian Rymill

SGX Group’s Lee notes that infrastructure investments have significantly contributed to low latency times and Singapore’s position. “Over the last 10 years, investment in infrastructure – hybrid cloud services enablement, data centres, colocation, hardware have all grown immensely,” he says. “These have allowed Singapore to evolve into a hive of price discovery, helping to bridge trading across the Asian, European and American time zones.” 

Combined with the rise of cloud-based trading technology, Singapore’s infrastructure investments have paid off handsomely. Rymill offers an example of how technology is playing a role in trade facilitation. “Traditionally execution traders have had to ask levels or “indicative pricing” from their sales coverage to gauge potential interest and axes for less liquid business they must execute,” he says. “The increasing sophistication of eFX pricing means that eCommerce can function as a window into the broader franchise and an entry point for dialogue about larger or more complex risk.”

Despite the rise of e-trading, Rymill notes that effective service tailors itself to client needs. “In our e-FX business, we partner hand-in-glove both with our clients externally and traditional voice sales coverage internally,” he says. “To facilitate a high service level, it’s essential to hold regular dialogue with clients of all sizes about their execution activity and how it relates to both their investment and execution processes.”

“Especially how eFX and algo execution fit into those processes to the benefit of asset owners,” he continues. “Our voice sales make sure eFX sales are at those meetings so that our clients have someone who can speak fluently to the complete eCommerce offering.”

Lee points out the broader technological advances are finding their way into client demands and service offerings. “We have seen a general rise in demand for execution platforms with embedded AI,” he says. “Another feature that is being developed in the industry is a text-based algo tool that makes trading easier for clients trading both OTC and exchange-traded products.” 

“Today, Singapore’s status as an FX hub is facilitated by the presence of leading FX firms that have launched trading engines with Equinix’s SG1 data centre,”

Gareth Bridges

Catering to regional buy side demands

Improvements in technology tend to spur new demands from market participants, particularly from the buy side. Proximity to an ecosystem is a top priority, Bridges says, something Equinix solves. “Equinix is home to the world’s largest multi-asset class e-trading ecosystem,” he says, “creating the means for major banks, FIs, and retail FX brokers in Asia-Pacific to interconnect on a fast, secure, and reliable platform.”

“The depth of liquidity partners and working with the right technology partners is essential to long-term success for buy-side firms,” he continues. When asked what attributes buy side firms must look for, Bridges says, at a minimum “…technology partners must offer reliable, capable, and scalable solutions that can evolve in line with customer needs, enabling them to effectively meet rapidly changing demands of modern trading environments.”  

Meanwhile Rymill notes that enhancing client experience is a top aim at State Street and clients tend to drive innovation and demand as a result. “I find some APAC clients are still adapting or establishing exactly what best execution means for them,” he says. “It could be driven by the consolidation in the asset management industry in Australia, or APAC-based alternative asset managers beginning to think about ideas that are more traditionally associated with the real money community.”

“Approaching these conversations with clients through the lens of a custodian,” he continues, “where there is a high degree of concern for the end asset owner combined with the resource within the group of a topflight TCA provider in the form of BestX, for example, is a huge advantage.”

He lists examples within State Street’s product suite as evidence of innovation and the kinds of demands service providers face. “With “Interest match” we delivered a first step toward peer-to-peer matching. It allows clients to leverage State Street’s unique franchise by matching client orders with our principal interests and other algo orders, lowering market impact and reducing signalling on external venues,” he says.

Low latency has proved a critical building block for Singapore’s e-FX growth

“The Portfolio Algo allows a user to group together multiple transactions, with the aim of reducing overall execution costs compared to executing each currency individually and our “Staged Algo” allows a parent algo order to be composed of multiple child algos.”
Lee uses TCA as an example illustrating SGX FX’s client focus. “TCA has become more than a box-ticking exercise for regulatory purposes,” he says. “It’s now a tool used to create a feedback loop that enables traders to make informed pre-trade and in-trade decisions to reduce costs.” 

“SGX FX supports clients with its Liquidity Provision Analytics and advanced TCA solutions which offer a robust analytical framework. We can cleanse, store and deliver client tick data via an API or into a GUI to allow clients to monitor their Liquidity Providers spreads and check for skews and top of book statistics. Our analytics offer numerous features such as best execution activity LP rankings and hit ratios, market share analysis, spread analysis and detailed analysis on best time to trade.”

He adds that SGX FX’s advance reporting tool allows clients to report on trade decay analysis across all their trades and “… own benchmarks, our own composite benchmark, or standard benchmarks such as WMR/Eod, etc.”

Singapore’s infrastructure investments have paid off handsomely

Solving APAC treasury needs with technology

Singapore has been Asia’s largest FX trading hub since 2013, and the reasons are easy to see. Geographically, the city-state offers proximity to growing Asian markets, offering stakeholders the ability to sell, price, and trade in a single venue conveniently located. 

Superior infrastructure and forward-thinking regulation have also played a role, leading to MNCs setting up regional headquarters in Singapore and establishing a base for risk and treasury management. While the market possesses significant depth and liquidity, corporate treasury management hasn’t come without challenges over the past year.

Angus Murray, EMS Specialist for APAC at 360T, is well aware of the climate treasurers currently face. “The unique regulatory environment in APAC poses unique challenges. For example, restrictions around onshore currencies and how they can be traded are obstacles that must be navigated.,” he says.

So what role can technology play in mitigating these risks and easing workflows in corporate treasury?

SGX FX sees higher volumes amid strong growth

As Singapore’s premier multi-asset exchange, SGX has had a front-row seat to Singapore’s growth story. SGX is now Asia’s leading marketplace for global FX OTC and futures participants. Lee Beng Hong, Head of Fixed Income, Currencies and Commodities at SGX Group, cites impressive numbers when asked about trading volume trends.

“We are on track to achieving our target OTC FX average daily volume (ADV) of US$100 billion and are now established as a global leader in the FX NDF market with 40% market share,” he says. “SGX FX also operates the largest and most liquid FX futures exchange in Asia. In 2022, we recorded an aggregate FX futures volume of US$2.07 trillion (up 37% YoY), with record open interest of US$18.6 billion (up 55% YoY).”

And how have 2023 volumes been panning out? “For the first six months of 2023, our aggregate FX futures notional volumes reached US$1.2 trillion with robust trading across major currency pairs including CNH, INR, SGD, KRW and TWD” he says. “Over 40% of our FX futures are traded during European and US time zones and this has trended upwards.”

Lee explains that SGX’s clients have been seeking solutions across three pillars: Enhanced digitalisation and automation, optimised execution, and better margin efficiencies. “Since our expansion into the OTC market with the acquisition of BidFX and MaxxTrader, SGX FX has become Asia’s leading and most comprehensive venue for the risk-management and trading of major currencies across FX instruments,” he says. 

“In September 2022, we launched SGX CurrencyNode, an FX electronic communication network (ECN) that connects global participants anonymously to unique and deep OTC FX liquidity pools. We have since rolled out NDFs and signed on 7 of the 10 global Prime Brokers while continuously growing our base of market participants.”

As a result, SGX’s clients have access to Asia-centric OTC and exchange-traded FX products in a single destination. “We were also the first exchange to launch FlexC FX Futures (FlexC) that are standardised yet customisable, offering OTC bilateral trades with tailored expiration dates to be registered and cleared on SGX FX,” Lee says.

When asked what market participants are trading in the region, he notes that OTC FX volumes are in line with global patterns. “About 60% of SGX FX’s OTC FX trading activity, across both buyside and sell-side customers, are in G10 currencies,” he says. “Asian currencies take up about 30% and continue to grow. While SGX CurrencyNode sees over 70 currency pairs actively traded in our marketplace, about a quarter of the volumes traded daily are in CNH, given the regional bias in our liquidity.”

He adds that SGX has become the leading NDF trading venue for investors looking to trade emerging markets. 

Lee concludes by noting MAS’ role in building an ecosystem that favours FX market stakeholders. “On top of this, Singapore is home to the world’s most liquid Asian FX futures exchange, that is SGX FX,” he says. “Having both the ECN and FX futures side-by-side no doubt makes Singapore more appealing and vibrant.”

SGX FX Futures notional volume in June 2023 is up almost 25% y-o-y to US$236.9 billion

Estimating treasury challenges and mapping needs

Murray identifies a few Asia-specific characteristics that need to be addressed by the modern treasurer. “Fragmented treasury structures are common in Asia,” he says, “with multiple entities and people dispersed throughout the region, making workflows complicated and often manual.” As a result, controls and oversight is challenging, and firms have been moving towards centralising functions. 

Standardisation is one way of mitigating this topic and puts firms in a better position to deal with more familiar situations. “Increasing volatility in Asian currencies and interest rates have impacted margins and cost of capital,” Murray says. Technology service providers have been rising to the demands, he notes.

Solutions enabling price transparency while streamlining workflows are commonplace in the market. Centralisation is a broad theme, Murray notes. “Streamlining workflows maximises both, time and cost efficiencies whilst simultaneously reducing operational risk,” he says. “Freeing up treasury personnel’s time to focus on more complex tasks by helping corporates automate low-value FX trades and manual processes, is also a major focus area.”

More electronification implies better access to data, and unsurprisingly, offering solutions around pricing outcomes, TCA, bank panel performance, and liquidity optimisation is in high demand. While treasurers can access solutions that meet these needs to varying degrees, Murray points out that being aware of what technology and automation can achieve is critical.

“We’ve seen the growth of highly flexible and user-friendly netting strategies to minimise transaction costs, optimise internal flows, and reduce operational and settlement risk,” he says,. Murray also points out that the rules-based auto-execution solutions for low-value trades and products are commonly used.

“Treasurers can even combine the use of automatic netting and execution rules to implement a low, or in some cases, no-touch workflow,” he says. Finally, he points out that the increasing use of algos in FX (primarily TWAP) to achieve better pricing outcomes points to the scope of services tech can offer treasurers. “At 360T, corporates are our largest consumers of algos in APAC,” he notes.

Managing data and screening service providers

The increased use of technology doesn’t come without some complexity. For instance, electronic systems are only as good as the data they’re given. This makes data management key. Murray says that best-in-class firms are using data to benchmark pricing pre, in-flight and post trade, and rethinking visibility between internal entities.

“Firms are implementing staged workflows to segregate duties and control visibility,” he says. “Using compliance tools to monitor, identify, and prevent breaches is also critical, and is rapidly gaining in popularity.”

“Data management also makes quantifying bank panel performance and TCA simpler, and facilitates transparency, liquidity optimisation and the instant identification of netting efficiencies too,” Murray adds. “Treasurers can align themselves with the idea of data driving better pricing outcomes.”

Establishing high-quality data governance workflows is essential, but treasurers need to rely on the technical teams to ensure top-notch infrastructure alignment too. For instance, “A treasury management solution (TMS) should supportinterfaces for STP eliminating human intervention for pre and post-trade order entry reducing double keying and operational risk whilst increasing efficiency and ensuring one source of truth,” Murray explains. He also points out that confirmation matching is powerful in streamlining settlement processes.

Given the technical nature of this list, how should firms go about evaluating service providers?

“Focus on your pain points, where your time is spent, and where your risks are,” Murray says. “If you view solutions through this lens you will ensure the tools you buy are fit for purpose. Forget the bells and whistles, focus on the nuts and bolts of what you need your technology to do for you.”

He adds that effective service providers work on a consultative basis, with a reliable track record of identifying risks, gaps, and efficiencies. “An extensive product range is also a good sign” he says. “ For instance, 360T expanded its suite of award-winning market data products, further refined the advanced automation tools available in the 360T Execution Management System (EMS), and launched Base Metals trading and streaming NDFs.”

“Treasurers should ensure the provider continuously innovates. At 360T we are committed to implementing three new technology releases per year, enabling our solutions to evolve alongside the needs of our clients.”

Mere electronification isn’t enough as technology grows more sophisticated. “Embrace automation,” Murray advises. “It’s not about replacing people, it’s about replacing processes. Then your Treasurers can focus on more valuable tasks.” 

He also says that using data to drive trading decisions and pricing discussions with bank counterparties is critical. “Ultimately, focus on your core business and automate the noise as much as you can,” he says.

“Fragmented treasury structures are common in Asia with multiple entities and people dispersed throughout the region, making workflows complicated and often manual.”

Angus Murray

Regulatory action is building a promising future

“Today, Singapore’s status as an FX hub is facilitated by the presence of leading FX firms that have launched trading engines with Equinix’s SG1 data centre,” Equinix’s Bridges says. “Our FX hubs, strategically located in the world’s largest FX markets such as Singapore, enable FX firms, including Euronext FX, Jump Trading, Lucera, Orient Futures, and Spark Systems, to execute trades more efficiently by minimising latency between counterparts.” Bridges singles out MAS’ progressive initiatives as the primary reason behind these developments and overall FX growth.

At the same time State Street’s Rymill offers an example of how regulation has boosted Singapore’s reputation as a stable and secure FX hub. “The CFTC approval of Recognized Market Operators (RMOs) authorised within Singapore (Bloomberg, Refinitiv, and SGX FX venues) as exempt from CFTC swap execution facility (SEF) registration requirements speaks volumes to the confidence in Singapore,” he says. “The easing of access to liquidity for clients who are based in APAC and papered with US legal entities is significant. We keenly await additional NDF matching engines in Singapore and the improvement in price discovery this should allow for.”

SGX Group’s Lee says, “FX trading technology is going through a renaissance period in Singapore. Thanks to the parameters, direction and guidance from MAS to help technology to flourish, there has been high-calibre talent inflow from the region, making Singapore all the more relevant as a banking and fintech hub.”

“MAS has successfully built the ecosystem,” he continues, “for both makers and takers to come and participate in building the SG1 matching hub. To kickstart, MAS helped major FX market makers to set up their pricing and hedging engine. Subsequently, they focused on assisting ECNs/marketplaces – this is how SGX CurrencyNode, a marketplace for both buyside and sell-side, was born out of SG1.”

The fintech view: Regulatory action and infrastructure key growth levers

Singapore’s exemplary infrastructure has attracted traders and firms from around the world. Regulatory foresight and proximity to growing Asian markets have ensured a highly developed fintech scene catering to these traders. Whether retail or institutional, Singapore is witnessing growing trade volumes and technology to support this demand.

While these factors have been around for some years now, Jason Wang, COO of Spark Systems, points to a more recent development as a spur for further growth. “Singapore is Asia’s major banking and financial centre, with a stable government and skilled workforce,” he says. “It has also now successfully built the SG1 data centre for FX buy side and sellside to trade and match their trades.”

Meanwhile Chan Chong San, Managing Director APAC at Edgewater Markets, also identifies the data centre as playing a critical role in Singapore’s recent FX journey. “It enables efficient and secure trading operations, ensuring low-latency connectivity and reliable access to global markets,” he says. “This infrastructure is crucial for FX trading firms to execute trades swiftly and capitalise on market opportunities.”

Technology is playing a critical role in Singapore’s growth. Here are the important trends and how fintech service providers view the marketplace.

“Institutions are increasingly recognizing the convenience and accessibility offered by mobile trading and are actively engaging in various activities through mobile platforms.”

Chang Chong San

Technological adoption accelerates further

When asked about interesting regional trends, Wang takes a step back and notes how prevalent tech is in everyday lives in the city-state. “ In Singapore, literally you do not need to carry cash when you go out, and do payments from your phone,” he says. “There’s also the growth of super-apps, where we see successful apps go into other aspects of businesses.” 

This mass technology adoption has found its way into FX. “At Spark, we have clients who choose us because of our mobile app, and we see banks that are adapting to allowing their traders to use mobile apps,” Wang says.

Edgewater’s Chan adds that institutional choices are changing as firms begin trusting service providers and technological solutions more. Notably, firms are more willing to leverage third-party experts for technological tasks that are not a core business function.

Chan offers an example. “One thing we’ve seen is the advancement of adaptive white-label technology. This allows financial institutions to leverage pre-built platforms and customise them according to their specific requirements, enabling faster deployment of digital banking solutions. They can maintain brand identity through modularity, flexibility, and client service.”

“As in other parts of the world, our recent expansion into Singapore supports this by offering a forex platform as a white-label solution to financial institutions in the region,” he adds.
In line with white labelling, Chan explains that a buy-and-build approach has gained momentum. “This strategy involves acquiring existing technology or partnering with established players to enhance the capabilities of fintech trading platforms, in addition to cultivating in-house technical talent to build and maintain differentiated systems,” he says.

The word “ecosystem” is used a lot when speaking of Singapore’s advantages as an FX hub. Wang explains that much of this ecosystem growth has emerged from the sell side setting up infrastructure in Singapore, which has led to knock-on effects.

“MAS has incentivised banks to set up their FX trading engines here. This was a multi-year program and now, there are over 20 banks with their FX IT infrastructure in Singapore,” he says. “This has attracted buy-side firms to Singapore and they have set up their IT infrastructure here too.”

In addition to the buy side moving, the sell side has shifted other departments to Singapore too. “We have seen sell side banks set up other upstream and downstream systems like Risk and Back office here,” Wang notes. “Many also have their FX traders and sales, quants, and IT support staff move to Singapore.”

Trader behaviour and regulatory stance

Stable regulation has played a key role in Singapore’s rise as an FX regional hub. MAS has initiated several AML, licensing, and risk management programs that have built trader confidence, leading to increased volumes. 

Chan cites a recent initiative as an example of regulation fostering confidence in the market. “MAS rolled out an Enhanced Market Surveillance system, which enables them to monitor trading activities and detect misconduct,” he says. “The trading community has generally responded positively to these regulations, understanding that these are to protect their interests. These regulations have resulted in a collaborative approach between regulators and market participants, with both sides working together to enhance the overall stability and growth.”

Wang notes that enhanced regulations offer opportunities for service providers. “Regulations usually mean more work to be done to meet requirements,” he says. “From our perspective, it creates opportunities. Recently, there has been a need for trading platforms to create a Unique Trade Identifier (UTI). At Spark, we are more than ready to meet these needs. Our agility to respond to the requirements helps to differentiate ourselves from the competition.”

The combination of regulatory confidence and technological adoption has created a few interesting behavioural trends amongst traders. Chan cites the growth of institutional mobile trading as an example and explains how Edgewater is catering to this demand.

“While retail traders have traditionally dominated the mobile trading space,” he says, “we’ve observed a notable increase in institutional participation. Institutions are increasingly recognizing the convenience and accessibility offered by mobile trading and are actively engaging in various activities through mobile platforms.”

But do mobile platforms offer the flexibility and customization inherent to desktop versions? “To cater to individual or firm-specific rules and requirements, Edgewater’s mobile trading platform offers comprehensive permissioning capabilities,” Chan explains. “This ensures institutions can tailor the platform to align with their unique trading strategies, risk management protocols, and compliance guidelines.”

“Edgewater has introduced a branded white-label tool that enables clients to extend the benefits of mobile trading to their own clients,” he adds. “This white-label solution allows institutions to offer a fully customised and branded mobile trading experience to their end-users, maintaining consistency with their overall brand identity.”

“We didn’t get here overnight, All parties must work to stay relevant in the ever-changing landscape to maintain Singapore’s status as a successful FX centre.”

Jason Wang

Looking ahead

Singapore has risen significantly in the FX world but faces stiff competition from the likes of Hong Kong and Tokyo in the region. Chan thinks a steady commitment to infrastructure development is critical to maintaining and growing Singapore’s position in the market. “By continuing to invest in infrastructure, Singapore can stay ahead in the race and provide a solid foundation for companies like Edgewater to deliver their forex platform seamlessly,” he says. “Incentivising key players to participate is also essential for Singapore’s success. The government and regulatory bodies can introduce initiatives and incentives to attract prominent forex companies and encourage their active involvement in the market. By fostering a vibrant ecosystem with a diverse range of participants, Singapore can ensure healthy competition and innovation within the forex industry.”

He also notes that talent development and migration are key growth levers for the city-state, allowing it to build a pool of proven expertise. Wang is similarly optimistic about Singapore’s growth. “We didn’t get here overnight,” he says. “There’s a lot of hard work involved by all parties, which include the MAS, the sell side banks, the FX buy side, the ECNs as well as the vendors. All parties must work to stay relevant in the ever-changing landscape to maintain Singapore’s status as a successful FX centre.”

The Regulator’s View

Every financial centre’s growth hinges on good policies to promote industry development, and Singapore is no different. Its proximity to Asian clients with rising FX needs and the presence of a critical mass of banks, asset managers, insurers, and treasury centres offer a deep pool of liquidity.

As electronification grows in FX, delivering services with low latency (powered by Singapore’s high-quality infrastructure) has become a reality, leading to the city-state’s exponential rise in FX circles. A MAS spokesperson highlighted the nature of this rise.

“According to the 2022 BIS Triennial Survey, Singapore’s average daily trading volume (ADTV) rose to US$929 billion, increasing by 45% from April 2019. With Singapore’s share of global FX volumes rising to 9.5% in April 2022, Singapore maintained its ranking as Asia’s largest FX trading centre, and the third largest globally.”

A lot of this increase reflects the increasing sophistication in Asian EM currencies. Asian EM currency volumes account for 10% of global averages, with NDFs showing healthy growth too. “To meet this demand, various platforms in SG1 have launched NDF offerings, with the latest being SGX Currencynode,” the MAS spokesperson says. “This will continue to drive liquidity in the FX market and allow Singapore to continue to capture flows. Later this year, LSEG Refinitiv is set to launch NDF matching in SG1, giving an additional boost to NDF liquidity.”

MAS has been focusing on convincing primary inter-dealer platforms, MDPs, and liquidity venues to locate their matching, pricing, and trading engines in Singapore. “The result of the FXET Ecosystem (FX e-trading ecosystem launched in 2018) initiative has seen 18 of the top 20 global liquidity providers set up pricing and matching engines in Singapore,” the MAS spokesperson says. “In turn, this has attracted liquidity takers, multi-dealer platforms and inter-dealer platforms to also set up here.”

While working to boost the region’s growth, MAS has reiterated its Statement of Commitment to the updated FX Global Code, encouraging all wholesale FX market participants in Singapore and their counterparties to adhere to the latest version.

One of the most exciting developments has been MAS’ initiative to encourage blockchain and other DLT solution use. When quizzed about the authority’s regulatory approach, the spokesperson says, “MAS has been collaborating with the industry to explore the potential of blockchain through experiments, providing grants and encouraging talent development. MAS has also adopted a regulatory approach that is technology neutral, risk-appropriate, and targeted.”

While they noted that the case for a retail CBDC in Singapore isn’t currently compelling, MAS has launched a series of initiatives to prepare the ecosystem for when a CBDC launch might be attractive. Project Orchid, the primary initiative, released its first report in October 2022 exploring Purpose Bound Money (PBM) use cases, building on the concept and capabilities of programmable payment and programmable money.

“November 2022 also saw the launch of Ubin+ in collaboration with other international financial regulators,” the spokesperson says. “The aim is to bolster digital currency connectivity and establish corresponding technical standards, infrastructure, and policy guidelines that will strengthen cross-border FX settlement using digital currencies.”

MAS has been advancing collaboration with the Federal Reserve Bank of New York’s New York Innovation Center (Cedar x Ubin+) to investigate how wholesale CBDCs could improve the efficiency of cross-border wholesale payments involving multiple currencies. 

In addition, MAS is also a part of Project Mariana, a collaborative effort between the authority, Swiss National Bank, Banque de France, and Bank for International Settlements (BIS) to explore the interoperability of regional networks into a global network for cross-currency exchange.

“MAS sees transformative potential and benefits of asset tokenisation, similar to securitisation 50 years ago,” the MAS spokesperson says. “To explore the potential of digital assets and advance the development of efficient and safe financial networks, MAS launched Project Guardian in June 2022. Through this initiative, MAS aims to collaborate with the financial industry to harness the capabilities of tokenised assets and decentralised financial protocols while managing the risk to financial stability and integrity.”

These are just a few of several initiatives MAS has initiated, leading to an undoubtedly resilient infrastructure for the future. These initiatives also offer examples of the qualities FX market stakeholders find highly attractive and explain Singapore’s rise in eFX.