Singapore is now the third largest forex market --- maybe

Trading Discussion
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Singapore Overtakes Japan as Asia’s Top Foreign-Exchange Hub - Bloomberg

Singapore is now the third largest foreign exchange market in the world, behind the U.K. and the U.S., according to Bloomberg — which got the information from the Monetary Authority of Singapore — which, in turn, gleaned the information from the Bank for International Settlements (BIS). However, I haven’t been able to locate the BIS source for this information. (The BIS Quarterly Review for September 2013 has not yet been posted on the internet.)

This 3rd-place ranking for Singapore is based on overall foreign exchange trading volume — [B]not specifically retail forex[/B] trading volume.

In recent years, Japan has accounted for a very large volume of retail forex trading (out of proportion to their overall foreign exchange trading volume). [B]And Japan may still be the largest retail forex trading market in Asia.[/B]

In about 3 months, we will have a new Triennial Central Bank Survey from the BIS, which will give us up-to-date metrics for Japan, Singapore and all the other major forex markets. That Survey (as its title indicates) is released every 3 years, so the metrics reported in the Survey typically change dramatically from one Survey to the next.

The Bloomberg article claims that overall worldwide foreign exchange trading volume is now [B]6.67 trillion USD per day,[/B] and they claim that this figure comes from the BIS. Again, I’m unable to locate their BIS source.

Note that, for technical reasons, the BIS reports 3 different figures for overall world foreign exchange trading volume in each 3-year Triennial Survey. In 2010 (the most recent Survey published), for example, those 3 volume figures were: $5.53 trillion/day, $5.03 trillion/day, and $3.98 trillion/day (referred to, respectively, as gross volume, net-gross volume, and net-net volume).

Presumably, the $6.67 trillion/day figure reported by Bloomberg is the latest so-called gross volume figure, although Bloomberg does not make this clear. If that’s the case, then the world’s overall gross foreign exchange trading volume increased by 20.6% (from $5.53 trillion/day to $6.67 trillion/day) in the 3-year period from April 2010 to April 2013.

Here’s a link to the 2010 Triennial Central Bank Survey — http://www.bis.org/publ/rpfxf10t.pdf

The 2013 Survey will be published in December.

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Singapore has leapfrogged Tokyo over the past three years to become the largest foreign exchange centre in Asia.
Over the past three years, Singapore’s average daily forex turnover has grown 44 per cent, reaching US$383 billion (S$489 billion) in April this year.

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Yeah, Singapore is such a booming land for forex traders nowadays. A nice source of part-time income without much sweat there. The major plus of doing forex trading is that ROI is very lucrative. By investing few dollars can make the return thousands of dollars (not always though). With a robust economy that has catapulted the value of their Singapore dollar (S$). It is thus not too surprising why and how they displaced Tokyo and Japan.

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I understand Singapore has one of the lowest tax rates in the world.

Anyway, I suppose this is good news. Being in Australia, if you want to daytrade, you’re stuck with the Asian session. More forex trading during Asian hours sounds good to me!

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Interesting! Thanks for sharing this article!

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About the time that I started this thread, the [B]BIS 2013 Preliminary Central Bank Survey[/B] became available on the internet. See this post for a brief description of the Preliminary Survey (including a link), and a summary of the metrics it contains.

Some of the data reported in the Bloomberg article (linked in post #1 on this thread) can be confirmed in this Preliminary Survey. However, the $6.67 trillion figure cited by Bloomberg does [B]not[/B] come from the Survey, and I still don’t know where Bloomberg got that number.

The following excerpt, from page 3 of the Preliminary Survey, gives some overall forex market metrics, and mentions Singapore’s third-place ranking among forex trading centers:

Highlights of the 2013 survey

Trading in foreign exchange markets averaged $5.3 trillion per day in April 2013. This is up from
$4.0 trillion in April 2010 and $3.3 trillion in April 2007. FX swaps were the most actively traded
instruments in April 2013, at $2.2 trillion per day, followed by spot trading at $2.0 trillion.

The growth of foreign exchange trading was driven by financial institutions other than reporting
dealers. The 2013 survey collected a finer sectoral breakdown of these other institutions for the first
time. Smaller banks (not participating in the survey as reporting dealers) accounted for 24% of turnover,
institutional investors such as pension funds and insurance companies 11%, and hedge funds and
proprietary trading firms another 11%. Trading with non-financial customers, mainly corporations,
contracted between the 2010 and 2013 surveys, reducing their share of global turnover to only 9%.

The US dollar remained the dominant vehicle currency; it was on one side of 87% of all trades in
April 2013. The euro was the second most traded currency, but its share fell to 33% in April 2013 from
39% in April 2010. The turnover of the Japanese yen increased significantly between the 2010 and 2013
surveys. So too did that of several emerging market currencies, and the Mexican peso and Chinese
renminbi entered the list of the top 10 most traded currencies. Methodological changes in the 2013
survey ensured more complete coverage of activity in emerging market currencies.

Trading is increasingly concentrated in the largest financial centres. In April 2013, sales desks in
the United Kingdom, the United States, Singapore and Japan intermediated 71% of foreign exchange
trading, whereas in April 2010 their combined share was 66%.

The last paragraph in that excerpt creates the impression that the principal forex trading markets are the U.K., the U.S., Singapore and Japan. Europe is not mentioned, at all, leaving the impression that its share of the market must be smaller than the shares of these four countries. The source of the confusion here is that the BIS is concerned with gathering and reporting the metrics of individual countries, not regional markets.

Forex traders, on the other hand, are concerned with the total impact of all the forex trading volume hitting the market at specific times of day, regardless of where that volume comes from. In the case of Europe, approximately 20 industrialized countries reside in one time zone, and their combined daily trading volume, all at the same time of day, is almost as great as the daily trading volume of the U.S.

So, if central Europe were a country, it would be listed third, after the U.K. and the U.S., and ahead of Singapore in the last paragraph of the excerpt.

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Very good one Clint. Thanks for sharing