FX pricing engine edges Singapore ahead of Hong Kong in FX stakes
(4 December 2019 – Singapore) Citi has launched a new foreign exchange (FX) pricing engine that slashes payment speeds between Singapore and Japan.
The platform reduces latency by eliminating the need to route trades elsewhere. The proprietary in-house FX engine includes an innovative pricing and hedging algorithm quoting 23 spot currencies including emerging market currency pairs in addition to precious metals. It marks the bank’s fourth trading location in addition to its London, New York and Tokyo infrastructure and signifies its commitment to support price discovery and trade execution during Asian trading hours.
Since 2017, UBS, JPMorgan and Standard Chartered have joined Citi in setting up similar matching engines to cater to the growing wealth. UBS platform launched in Q2 2019 while JPMorgan and Standard Chartered are going live in early 2020. Non-bank market makers such as XTX and Jump Liquidity have grown their Singapore footholds in apparent recognition of the wealth of opportunity in the market.
Singapore retained its position as the world’s third largest FX centre behind the UK and US, with a market share of 7.6 percent. Average daily FX trading volumes rose 22 percent to US$633 billion in 2019 from US$517 billion in 2016 according to the latest triennial data from the Bank of International Settlements (BIS). Despite growth across G10 and emerging market currencies, Singapore’s lead over regional competitor Hong Kong narrowed as the SAR saw average daily FX trading volume pick up at a faster rate to close at US$632 billion to rank as the fourth largest FX hub by volume ahead of Japan.
“Prior to establishing this platform, clients would have to connect via Tokyo or one of our trading engines outside of the region. This round-trip latency between Singapore and Tokyo is approximately 70 milliseconds, which is a huge difference for price discovery” stated Citi Global Head of Electronic Trading for FX and Local Markets, Mark Meredith.
“To support our efforts, we are also investing in a new data centre that will be focused on FX co-location, which will enable us to offer improved price transparency and facilitate more efficient price discovery in the region’s time zone for our clients” he added.
"Global and regional FX players continue to expand their regional footprint in Singapore and are investing heavily in building up their skills and trading infrastructure, including in FX e-trading.
We expect these investments to bear fruit in the medium term and further improve the trading landscape for market participants and enhance price discovery, liquidity and transparency in the
Asian time zone” stated Monetary Authority of Singapore Deputy Managing Director Jacqueline Loh.
“The share of FX trading in the leading Asian financial centres, namely Hong Kong SAR, Singapore, and Tokyo, declined slightly to 20% in April 2019. This was mainly driven by relatively slower growth of activity in Singapore and Tokyo. Turnover in Hong Kong SAR grew at a higher rate than the global aggregate, raising its share in global turnover by one percentage point,” BIS said in its triennial central bank survey.