Singapore takes Hong Kong’s place as number 3 financial center in the world

Singapore has now surpassed Hong Kong as the third largest financial center in the world, after London and New York, according to British research consultancy Z/Yen Group’s Global Financial Centers Index (GFCI) report which was release on Friday, April 8.

Until this month, Singapore had ranked fourth in the world, and the second largest in Asia – although for some years, Singapore has been home to the largest institutional and interbank trading ecosystem in Asia.

The Z/Yen report takes into account various criteria, including performance of the financial centers in the areas of business environment, financial sector development, infrastructure, and human capital and reputational factors.

This bodes well for some of the large and established businesses in the FX industry, OANDA Corporation’s Asia Pacific operations led by leading edge and charismatic industry executive Rajesh Yohannan made the leap to take the number 1 FX broker position in Asia, with 18% market share, from its Singaporean headquarters.

OANDA Corporation was followed by three British spreadbetting firms, those being IG Group, CMC Markets and City Index, alongside Singapore’s very own Phillip Futures which made it into the top five.

Clearly, although Singapore is renowned for its vault-like banking system and extremely advanced interbank and institutional FX business, retail FX is indeed very popular among astute Singaporean investors.

The prospects for Singapore look rosy in the coming years, the Z/Yen report showed. One interesting finding of the latest survey is that Singapore is ranked No 1, with the most number of mentions, when respondents were asked which financial centre will ­become more significant in the next few years, noted Ms Judy Hsu, CEO of Standard Chartered Singapore.

“This implies that the professionals in the financial industry foresee Singa­pore playing a bigger role in shaping the international financial landscape in future,” she said. “Credit has to be given to the Monetary Authority of Singapore for ensuring that Singa­pore’s financial ­industry remains ­vibrant, dynamic and competitive by working closely with financial institutions such as ourselves to develop and promote Singapore as a regional and international financial center.”

London continues to retain its global leadership position ahead of New York, but the report noted that the two Western financial capitals are more “complementary than purely competitive”. However, it was pointed out that Brexit concerns are hurting London’s standing. “A number of respondents to our questionnaire have commented that the uncertainty surrounding the possible exit of Britain from the European Union is having a negative impact on London’s competitiveness at present,” said the report.

Indeed, the current wrangling surrounding the proposed merger between London Stock Exchange and Deutsche Boerse is a case in point.

Seven of the top 10 Asia-Pacific center dropped down the ranks, with Seoul and Sydney reporting the largest declines. Western European centres, according to the report, remained mired in uncertainty. The North American region displayed mixed fortunes, with financial centers in the United States, such as New York and Washington DC, rising in the ratings while the three leading Canadian centres fell.

Mr Mark Yeandle, associate director at the Z/Yen Group and the author of the GFCI said: “While London and New York still lead the field, the next three centres are all Asian. Five of the top 10 centres are now North American, perhaps reflecting the surge in fintech and blockchains.”

The GFCI, calculated every three months and published every six months, examines the global competitiveness of the major financial centres. The report provides profiles, rating and rankings for 86 financial centres, drawing on two separate sources of data: Instrumental factors, and responses to an online survey on 24,495 financial centre assessments completed by 2,520 financial services professionals.