“Singapore’s appeal for banks and global FX trading firms like Edgewater lies in its strong financial ecosystem, innovative trading technologies, and strategic location,” says Brian Andreyko, Chief Product Officer at Edgewater Markets. “The stable regulatory environment, led by the Monetary Authority of Singapore [MAS], offers transparency and trust, while supportive government policies and high compliance standards ensure security.”

Aside from geopolitical stability and excellent global connectivity, Qian Ying Goh, Head of Institutional FX sales for StoneX Pro Singapore, points to another factor. “Singapore has a robust depth of buy-side clients such as family offices, hedge funds to sell-side from Tier 1 banks, regional banks, regional FCMs, major payment providers, and commercials,” she says. “Most of them are household names in APAC, ensuring huge foreign currencies demands on their local currencies against other major currencies.”

Here’s what the FX picture looks like in Singapore, the state of digitalisation, and how the electronic FX ecosystem is set to expand.

International investor appetite continues to fuel growth

Stable regulation and a strategic location have powered Singapore’s rise as a regional hub. The continued growth of Asian economies remains a factor aiding demand for regional opportunities.

Soo Chin Tan, Head of Capital Markets FX Sales, APAC, LSEG, has kept a close eye on these developments. “The rapid economic expansion of Asia economies, particularly China, India, and in recent years, ASEAN, has led to global investors’ increased appetites for regional opportunities,” she says.

“As Asia’s share of global GDP and trade increases, the demand for efficient FX execution and risk management grows, driving the need for more sophisticated e-FX platforms.” This influx of investors has contributed to deeper liquidity and tighter spreads Tan says.

In turn, as liquidity and price discovery become more transparent, regional and global traders benefit, creating a virtuous circle that positions Singapore as a prime location for eFX. Tan points to a few effects of this growth.

“The demand has led to a surge in trading volume in Asian currency pairs like the USDSGD, USDCNH, USDKRW, etc,” she says. “In LSEG FX venues, we have witnessed the growth of regional currencies trading multiple-fold from regional banks and financial institutions over the past few years.”

As demand increases, stable regulation from the Monetary Authority of Singapore has ensured the city-state’s growth remains on track. Andreyko says this has played a significant role in Edgewater basing its activities out of Singapore.

“SG1 is our core data centre in the region [and] allows us to support technological innovation, leading to faster, more efficient trades for our clients,” he says. “Increased trading volumes through the SG1 data centre results in tighter spreads and better regional pricing. Progressive regulatory frameworks support fintech development, fostering a conducive environment for digital FX.”

Andreyko adds that the emerging markets in SE Asia are offering significant opportunities for 24-hour FX trading services. “These factors make the region a vibrant landscape for Edgewater to seamlessly deliver our technology to a growing client base that sees the value of integrating modern FX technology.”

Singapore’s, and Asia’s, relatively young and digitally-savvy populations have ensured the rapid adoption of new and innovative services. Over time, this adoption has translated into a demand for more sophisticated financial products. Add regulation stability to the mix and Singapore’s growth story becomes less surprising and seems almost inevitable in retrospect.

“Progressive regulations and government initiatives, such as the Monetary Authority of Singapore’s support for fintech innovation, create a conducive environment for e-FX growth,” Andreyko says. “Enhanced connectivity and integration with global financial networks have enabled seamless cross-border transactions.”

As investor appetites increase and regulatory authorities offer a supportive environment, how are leading eFX service providers offering more innovation?

The service provider’s view

Complexity is a common theme service providers stress when asked about execution patterns. StoneX’s Goh says that market demand has shifted away from simplistic spot contracts. “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,” she says.

“We also see demand from clients trading in regional NDFs such as IDR, INR, PHP, THB, and KWR, all available through our trading platform,” she adds. Goh notes that StoneX’s ability to physically deliver up to 17 global currencies including AUD, JPY, SGD, and CNH in the APAC region has contributed significantly to the firm’s growth.

LSEG’s Tan says that service providers have been investing heavily in technology, infrastructure, and innovation to cater to more sophisticated electronic trading demands in the NDF and FX markets. “For example, at LSEG, we are re-platforming our FX Venues to provide improved performance, client experience, and flexibility,” she says.

“This includes a significant systems upgrade, and migrating our FX venues to a proven, common core technology. Spot and Forwards Matching will evolve with improved performance, market data, and new order types.”

Tan notes that LSEG’s newly cleared NDF Matching venue in Singapore, directly linked to LCH ForexClear, is now live. With regards to algo trading, she says “…LPs have expanded their Algo offerings to include NDF currencies, together with enhanced execution toolset and more sophisticated trading algorithms.”

Andreyko says that electronic trading in Singapore revolves primarily around major currency pairs (like USD, EUR, JPY, GBP, AUD) and regional currencies (like SGD, CNH, HKD). With most market participants demanding advanced analytics, AI-driven insights are a popular feature on Edgewater’s platform.

AI also features in the number of novel solutions appearing for cross-border payments and other fintech use cases. “[Service] providers are utilising AI and machine learning for advanced trading platforms, blockchain for secure and efficient cross-border payments, and developing user-friendly digital banking apps with personalised tools,” he says.

“Mobile trading services additionally offer real-time data and robust security for on-the-go portfolio management. These advancements enable more efficient, secure, and user-centric financial services, driving growth and adoption in Singapore and Southeast Asia.”

Goh adds that the number of fintech providers offering novel solutions is increasing considerably. “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,” she says.

And what’s fuelling this growth?

“Accessibility to capital, reductions in technology costs, and an increasingly well-educated and experienced workforce,” Goh says. “We’ve seen a significant correlation between the surge in growth of these companies and the demand for FX from the same sectors. It’s easy to see the proliferation of cross-border payments firms at any fintech or financial services conference and StoneX is actively supporting many of these firms with our deliverable FX and currency hedging solutions.”

Given Singapore’s tech-forward stance, one would expect digital assets to receive considerable interest. Goh confirms this view. “According to recent reports, a significantly higher percentage of institutional investors in Hong Kong and Singapore have explored or have already invested in digital assets, and this number is notably higher than in some other leading global financial markets,” she says. “This interest is no doubt influenced by a favourable regulatory environment and robust infrastructure that support digital asset activities.”

Goh is quick to point out MAS’ role in these developments. “The Monetary Authority of Singapore has granted licences to several digital asset exchanges that serve institutional investors including banks, asset managers, and hedge funds​​.”

Concurring with Goh’s views, Andreyko says that digital asset development also extends to custody solutions. “Government and private sector initiatives promoting blockchain technology have enhanced transparency and efficiency in digital asset transactions,” he says. “Furthermore, comprehensive market infrastructure, including liquidity providers and market makers, has been created to support the trading of digital assets.”

Andreyko says these efforts have made Singapore a highly desirable destination for institutional investors and traders looking to engage with digital assets.

T+1, financial transformation, and further electronification

FX settlement’s hottest topic right now is America’s move to a T+1 cycle. When asked about its impact on Singapore and FX in general, Goh says she expects it to be negligible in terms of day-to-day operations.

“Obviously, the trading landscape has changed for some of our underlying hedge fund, asset management, banking, and brokerage clients, but the complexities added by T+1 haven’t impacted us directly,” she says. “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.”

Andreyko feels T+1 will enhance FX trading operations by reducing counterparty risk and improving liquidity. “Faster settlement times increase efficiency and reduce capital tied up in trades,” he says. “However, it will also require significant operational adjustments, including upgraded technology and processes to meet the shortened timeline. Overall, the move to T+1 is expected to promote greater market stability and competitiveness in Singapore’s FX trading landscape.”

In line with furthering stability and competitiveness, MAS recently announced the launch of the Financial Services Industry Transformation Map 2025 (ITM). The regulator aims to create 3-4,000 net jobs and achieve value-added growth of 4-5% every year. The program broadens and deepens the FX trading ecosystem, aiming to reinforce Singapore’s position as a trading hub of choice for market stakeholders.

LSEG’s Tan says the ITM “…also includes schemes to attract more liquidity takers to eFX venues and supports the adoption of emerging technologies, such as AI, machine learning and distributed ledger technology in the financial services sector.” She believes these moves will likely result in more sophisticated analytics and risk management tools.

The promotion of sophisticated technology is a critical part of the program, says Edgewater’s Andreyko. “Technological innovation is a key component, and that’s what attracted Edgewater to the region, with the promotion of cutting-edge technologies such as AI and blockchain to enhance trading capabilities and infrastructure,” he says.

“Additionally, the plan emphasises talent development, investing in skills and education to ensure a highly skilled workforce capable of supporting the growing FX ecosystem. Continued refinement of regulatory frameworks will maintain a secure and transparent trading environment, boosting investor confidence and participation.”

Goh notes that the ITM is just the latest measure in a long line of regulatory innovations that have helped Singapore stand out in the region. “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 says.

“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 continues. “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.”

Singapore’s future is bright

Singapore boasts several advantages that have propelled it to a leading spot in the FX world and this momentum is unlikely to slow down soon. “The Singapore government is expected to continue fostering a favourable business climate to attract financial services firms to the city,” Goh says. 

“The city boasts a highly educated workforce that has been bolstered by a significant influx of financial services workers and businesses towards the end of the Covid lockdown as Hong Kong’s zero-Covid policies pushed them towards Singapore.”

Andreyko concurs with this view. “The potential for further electronification of FX trading in Singapore is substantial, focusing on advanced algorithms, AI, blockchain, API integration, and mobile/cloud-based solutions. Continued regulatory support will drive innovation, enhancing efficiency, transparency, and accessibility, solidifying Singapore’s position as a leading global FX trading hub.”

“Efforts are being made to attract liquidity providers and expand FX product offerings, including NDFs and derivatives, to ensure deep and efficient markets,”he continues. “The country is also prioritising the development of a highly skilled workforce and attracting global talent while fostering public-private partnerships and international collaborations to drive innovation and address industry challenges.”

Aside from FX, initiatives within ESG, green finance, and the development of digital asset platforms are set to help Singapore retain its competitive edge and grow despite increasing regional and global competition.

Technology continues to drive SGX FX upwards

Singapore’s sophisticated investors demand access to innovative products and Singapore Exchange (SGX Group) has been at the forefront of meeting these needs. A longstanding commitment to delivering best-in-class solutions has ensured one of Asia’s largest multi-asset exchange remains traders’ preferred choice.

“Singapore has significantly advanced its financial and digital infrastructure with technological innovation and robust connectivity to provide the lowest latency times, domestically and internationally, between its peer FX trading hubs,” says Vinay Trivedi, Chief Operating Officer, Sell-Side Solutions, SGX FX. “Round-the-clock trading availability, low trading costs, high transparency, and liquidity are some of the key features of Singapore’s e-FX trading landscape.”

Trivedi points out that MAS’ efforts to bolster the FX environment with progressive programmes have played a critical role. “The acceleration of cloud providers in recent years driven by favourable government policies has also benefited Singapore’s digital infrastructure,” he says. “Singapore is now home to more than 70 data centres, with the government recently announcing a roadmap to improve data centre energy efficiency to unlock greater capacity.”

These efforts and technological innovation have led to Singapore positioning itself as a trusted and neutral jurisdiction, and the preeminent location where price discovery and matching takes place. KC Lam, Global Head of FX and Rates, SGX Group, says that investors view SGX FX as a venue for price discovery. “As SGX FX futures trade close to 24 hours, the interaction between listed FX and OTC FX will drive increased FX trading activity as a whole and not just in the Asian time zone,” he says.

“Besides using SGX FX Futures (particularly for CNH, INR, and KRW) as a pricing source,” he continues, “OTC FX participants are finding it easier to offload risks accumulated in the OTC market by trading SGX FX futures as it has minimal market impact. In such market conditions, institutional investors turn to SGX FX as deep liquidity, ease of price discovery and transparency are critical.”

Recent macroeconomic events have created volatility in Asian currencies and prompted heightened hedging activities across SGX FX’s currency pairs including CNH, JPY, INR, and KRW.

“In May 2024, our FX futures trading volume was up by about 50% to US$312.4 billion in notional terms, driven by record trading activity in our SGX USD/CNH futures which saw open interest hitting US$20.3 billion – our highest ever,” Lam says. “Our SGX INR/USD futures and SGX KRW/USD futures also recorded the largest single-day open interest at US$7.0 billion and US$1.1 billion respectively.”

Lam notes that activity and liquidity from US and European market participants are rising, with over 40% of SGX FX futures traded outside Asia’s trading hours. He also says SGX FX has taken steps to help customers manage price risks in CNH FX futures and OTC spot.

“We recently adjusted the official reference rate and timing of the Final Settlement Price (FSP) for our CNH FX futures contracts,” he says. “Our customers who are trading spot or options in USD/CNH, for example, can now establish a hedge via our SGX USD/CNH FX futures and options seamlessly and efficiently. These latest changes were driven by feedback from our customers.”

Trivedi says Asia FX NDFs have benefitted from Singapore’s concerted push to build out the FX ecosystem. SGX FX – which offers one of the largest multi-dealer platforms for NDFs alongside its ECN SGX CurrencyNode hosted in SG1 – provides buyside and sellside market participants with deepest streaming liquidity in the NDF market.  In addition, Trivedi says the infrastructure needed for eFX has an impact outside traditional capital markets – notably in blockchain and DLT solutions. SGX FX has since entered the digital asset space. “[Our] solution offers the ability to price, trade, and distribute any cash or tradable tokenised digital assets,” he says. “This solves current execution challenges in digital assets trading by introducing trusted and proven TradFi best execution. By bringing our TradFi know-how into digital asset trading, we hope to contribute to Singapore’s rising influence as a global digital asset hub.”

When asked how much more potential electronification in FX trading in Singapore has, Trivedi is bullish. “Singapore has significant potential for further electronification. We expect the development and expansion of electronic communication networks and multi-dealer platforms to continue in Singapore, providing more liquidity, tighter spreads, and improved execution quality for market participants.”

“What holds boundless opportunities is AI,” he says. “SGX FX’s AI tool gathers FX and digital assets price and trade data before automatically generating actionable insights to a stakeholder for better-informed decision-making.” 

Evidence of SGX FX’s commitment to technological innovation was its recent performance at the 2024 WatersTechnology Asia Awards. It clinched an award for Best AI-Based Solution, recognizing its ability to parse large volumes of market data and offer traders actionable signals and insights.

“At the moment, we are only scratching the surface of AI,” Trivedi continues. “There is a lot of data in FX that is not exchange-traded, not centralised, and unstructured. How can we mine and monetise this data?”

If SGX’s track record is anything to go by, we will undoubtedly see novel solutions emerging over the next few years, contributing to Singapore’s attractiveness as an FX hub.

Regulatory vision continues to drive Singapore’s advantages

Singapore has several factors in its favour that have turned it into a global FX powerhouse. Stable regulation and a forward-thinking posture are perhaps two of the most important variables that have propelled Singapore’s rise, aside from its favourable geographic location and proximity to growing economies.

“In recent years, the position of Singapore’s FX industry has been further bolstered by the development of e-trading infrastructure by key global players,” a MAS spokesperson says. “Some trends and recent developments include the deepening of e-FX product scope and trading capabilities by new entrants into SG1, the continued growth of asset management AUM that grew by 42.8% from S$3.4 trillion in 2018 to S$4.9 trillion in 2022, and [Singapore functioning as the] home to a range of market participants including non-bank financial institutions, such as 4,000 regional treasury centres.”

MAS launched the Foreign Exchange E-Trading Ecosystem (“FXET”) initiative in 2018, recognizing the increasing pace of electronification in FX. These initiatives have led 18 of the top 20 global liquidity providers to set up pricing and matching engines in Singapore.

“The latest phase of the FXET initiative was launched in August 2023 to support a wider group of liquidity takers to catalyse the growth of e-FX demand out of Singapore,” says MAS’ spokesperson. “Additionally, the growing presence of e-FX infrastructure in Singapore has been a key contributing factor to the strong growth of Singapore’s FX volumes.”

The spokesperson says Singapore’s eFX space is set to grow, spurred by “broad-based growth across Asian Emerging market (EM) currencies.”

“In recent years in Singapore, we have also seen e-trading platforms and global banks adding Asian EM FX products, such as non-deliverable forwards (NDF) and CNH spot FX, to their e-trading offerings,” the spokesperson says.

Singapore has always adopted a tech-forward approach and MAS’ efforts to pave the way for greater digital asset adoption is no surprise. Project Guardian, a collaboration between MAS and 24 financial institutions, aims to explore the potential of asset tokenisation in Fixed Income, FX, and Asset & Wealth Management.

In an example of a successful pilot implementation, Bank of New York Mellon and OCBC trialed a cross-border FX solution to enable secure, interoperable payment solutions across diverse networks. Additionally, MAS’ spokesperson says, “Ant International is developing a financial solution to improve how global funds are managed and utilised, allowing for instant, cross-currency transactions and settlements, and facilitating continuous FX trading capabilities.”

Has the project yielded any interesting results so far? MAS’ spokesperson highlights a few. “The pilots conducted under Project Guardian have shown promise,” they say. “Tokenised FX transactions can be settled faster due to the automation through smart contracts, the cost of establishing and maintaining multiple bilateral counterparty trading lines required in today’s over-the-counter markets has reduced, tokenisation is allowing seamless money movement that is not restricted by time zones or fragmented across multiple trading venues, and the cost of maintaining numerous bilateral correspondent relationships has lowered.”

Financial Services Industry Transformation Map 2025

In terms of initiatives, MAS’  Financial Services Industry Transformation Map (“ITM”) 2025 looms large. The initiative aims to position Singapore as an international financial centre that connects global markets and supports Asia’s development. “Our strategies under ITM 2025 include deepening capabilities across key asset classes to enhance Singapore’s value proposition as a financial centre,” the spokesperson says. “This will create multiplier effects and benefits across all asset classes.”

“As more regional financial services get intermediated through Singapore, this will continue to drive demand for FX products and solutions for risk management, and thereby the growth of our FX industry,” they say.

Ultimately, these initiatives are set to cement Singapore’s position as a key player in the financial world. “Singapore will play an important role in capital intermediation for the region, offering financing, investment, and risk transfer solutions for the real economy, including infrastructure and sustainability – where growth will come from investments for development as well as the transition to net zero,” MAS’ spokesperson says. “At the same time, Singapore will build up digital asset capabilities as new technologies reshape the future of finance.” 

With such regulatory vision, Singapore is unlikely to forfeit its advantage in the FX world anytime soon.