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In Singapore, Deutsche Bank is constructing a global EM FX trading engine

The foreign exchange market, also known as the over-the-counter market, is a worldwide decentralized or over-the-counter market for currency trading. Any currency’s foreign exchange rate is determined by this market. It encompasses all facets of purchasing, selling, and trading currency at present or fixed rates. It is by far the biggest industry in the world in terms of exchange volume, which is followed by the credit market.

Due to increased trade in Asia and the growing value of the Chinese yuan, Deutsche Bank AG is replacing its global pricing engine for developing countries’ currencies in London with one in Singapore. According to Singapore-based David Lynne, the bank’s chief of fixed income and currency operations in Asia, locating modern and more efficient computer hardware and software in the city-state would help the bank shave precious fractions of seconds off the time it takes to execute orders in the area.    

With the emergence of high-frequency trading and the yuan, which now accounts for around 4% of global currency volumes, the change emphasizes the need to position servers closer to consumers. It’s also a victory for Singapore, Asia’s largest currency trading center, which is struggling to keep its lead over Hong Kong and capture a larger share in Chinese currency trading.  

Singapore is establishing itself as a major regional liquidity hub, and it, along with a few other rivals, is expanding bandwidth in the country to increase the speed of transmission into more Asian countries. The improvements they are making in modern hardware in Singapore are significantly increasing the financial company’s technological capabilities. According to Lynne, the city-state also has a speed advantage. “It transmits FX pricing into local Asia FX markets quicker than Tokyo.”  

According to the latest triennial survey from the Bank for International Settlements, Singapore is ranked third internationally, behind the United Kingdom and the United States, in the $6.6 trillion-a-day foreign-exchange market. Even though the financial brokers online do have the ability to provide people from all over the world with effective service   The Singapore Monetary Authority has been urging banks to develop structures that would eliminate the lag caused by routing trades via London or Tokyo in recent years.  

The MAS has been promoting its offshore status for Chinese yuan trade in addition to regular trading volumes of $640 billion, up 24% from 2016.

Major Players  

The United Kingdom is still remaining to be the world’s largest trade center, with a $6.6 trillion foreign exchange market. According to BIS reports, all of the major forex centers are vying for a larger share of yuan trading, which has hit a daily average of $284 billion, making the yuan the most traded emerging-market currency. Given that the yuan’s share of global payments and central bank reserves is only just around 2%, there’s still space for development. As global investors demand higher returns, capital inflows into China are increasing. Authorities are considering loosening limits on people trading in shares outside of the mainland, which will allow for further cross-border capital flows. According to Lynne, who joined Deutsche Bank in Singapore in 1998, the bank is also expanding its algorithm-based capability for onshore yuan trading in China. “We’re beefing up our algorithm capabilities for China,” he said, referring to the China Foreign Exchange Trade System. “We now see a large portion of our goods relying solely on algorithmic trading. In the future, we hope to see more activity pricing on it. Clients, especially those in China, are increasingly asking Deutsche Bank to adjust the invoice currency for transactions to renminbi. It is expected the demand to continue to rise.

Workers from the Emerging Markets team will continue to be distributed across London, New York, Hong Kong, and Singapore, with no changes in headcount due to hardware venue. According to the 2020 Euromoney report, JPMorgan Chase & Co. and UBS Group AG, the world’s largest forex trading banks by value, have already developed FX pricing and trading engines in the island country. Singapore is also a major trading hub for Deutsche Bank and Citigroup Inc., which are listed fourth and sixth, respectively. London, New York, and Tokyo are Deutsche Bank’s other three major FX centers.

Summing It Up  

Finally, to sum up, the increased role of the Asian economies in the financial market is worth talking about. Sometimes the speed of those markets overlaps the speed of the experienced markets, such as London or New York. Singapore is a country with developed economies and its role in the market is growing every day due to its location and advantages that it can bring to the general world economy. The member of the Asian Tigers which is the name of the economies of South Korea, Taiwan, Singapore, and Hong Kong, is one of the greatest places for future investment. In the early 1960s and the early 1990s, they experienced rapid industrialization and experienced annual growth rates of more than 7%. This is why it is no surprise that the major financial services or banks are willing to establish on the market, due to the possible benefits that can be brought through it.