Tag: Derivatives

Listed FX volumes continue to set records on SGX FX’s flagship contracts as market participants seek secure and cost-efficient sources of liquidity in an increasingly uncertain trading environment

Trading on SGX FX went from strength to strength in 2024 as market turmoil took hold of the markets on the back of diverging interest rate paths between the US Federal Reserve and the Bank of Japan. Over the last 10 months of the financial year, FX volumes at the Singapore exchange grew by a healthy 54%, with the USD/CNH futures contract reaching its highest volume in August as the yen carry trade unwind was in full swing.

The contract continued to perform well in the early part of 2025 as markets wrestled with increasing trade tensions and general uncertainty. The surge of 80% of USD/CNH volumes to $33.5 billion in early April – the second highest since the yen unwind the previous summer – is symptomatic of the increasingly recurring bouts of volatility in FX markets in Asia and more broadly.

“The reason for the recent high volumes is obviously the US-China tariffs and the subsequent measures from both sides,” explains KC Lam, global head of rates and FX at SGX FX. “During times of market stress, there is always a major uptick in trade volumes of the USD/CNH contract on SGX FX, which is used by market participants worldwide to express FX risk. About 40% of our volumes are traded during US and Europe hours.”

As the second most exchange-traded FX futures contract in the world, USD/CNH at SGX FX is often used by market participants for price discovery and formation. Given the contract’s scope and market depth, it serves as the bellwether of general FX market volatility in the region.

Trading of other futures contracts at SGX FX has also grown substantially in recent years. Volumes of the INR/USD and KRW/USD contracts grew by more than 50% during the same period, indicating a general trend in FX trading in Asia towards a trusted exchange such as SGX FX. While over-the-counter (OTC) FX trading remains dominant, FX traded on exchanges has grown and gained significant ground in recent years.

“There is a change in the way market participants trade FX these days,” says Lam. “Primary venues and OTC FX remain important, but there are an increasing number of people looking for price and trend guidance from exchanges – such as SGX FX for Asian currencies and CME for non-Asian currencies. Many market participants – even very large OTC participants – come to us for market data via application programming interfaces to connect to their trading engines for price formation and discovery purposes. The very fact they are using this data suggests we are an increasingly important source of price formation.”

The level of trust earned by SGX FX has been achieved by its determination to provide added value to the region’s capital markets through greater price transparency and efficiencies. To this end, from its inception, the exchange has focused on Asian currencies, which are backed by the thriving flows of Asian commodities and equities.

As FX trading volumes have increased at SGX FX, the exchange’s offering and clientele have evolved in tandem. The community of market participants trading on the exchange is now increasingly global and diverse, with regional and international banks, as well as large institutional firms, seeking to reduce their trading costs through the efficiencies that exchanges provide.

“Trading on SGX FX is very efficient because market participants can offset their margins not only between FX positions, but also with other asset classes they might be trading on the exchange,” explains Lam. “This is particularly beneficial for those who wish to offset the margin on their directional FX positions with their commodities or equities trades.”

To further enhance its offering, the exchange is ramping up the trading of FX options on the exchange – particularly for the CNH contract. In addition, SGX FX is expanding into other emerging market currencies with the launch of its maiden Brazilian real futures contract in June 2025. This initiative, in collaboration with the B3 exchange, focuses on growing Brazilian real futures liquidity during Asian trading hours.

SGX FX was named Best Asia FX derivatives exchange at the FX Markets Asia Awards 2025.