SGX’s FX volume shines in a largely lackluster April

abdelaziz Fathi

The Singapore Exchange (SGX) notched a healthy gain in its FX and indices volumes, despite seeing a wavering performance across commodity and securities segments.

SGX

As April was yet another month characterized by higher volatility, SGX’s derivatives trading volume rose to a record amid macro uncertainties. The ongoing Russia-Ukraine conflict drove hedging activity in freight with derivatives daily average volume being reported at 1.1 million contracts in April, up 25% year-on-year. The ADV metric hit an all-time high of almost 3 million contracts on 26 April.

Equity index futures volume also climbed 23% relative to the year prior at 15.1 million contracts, while FX futures volume increased 27% year-over-year to 2.8 million contracts – the highest since March 2021.

The exchange reports the trading volumes for its USD/CNH Futures contract at 1.2 million contracts, up 58 percent from a year earlier. The CNH or offshore RMB is increasingly being adopted as a safe-haven currency amid heightened risk aversion, and the SGX contract is the world’s most traded CNH futures.

In addition, trading activity picked up in SGX INR/USD Futures with volume moving higher by 9% year-over-year at 1.5 million contracts.

FX trading volumes consolidate

In a different vein, commodity derivatives volume nearly halved in April as market volatility normalised from recent months, coming in at 2.1 million contracts. As the crisis over Ukraine exacerbated volatility across global markets, SGX’s commodity derivatives traded volume rose to a record 4.1 million contracts in the month prior.

Securities daily average value (ADV) also took a hit with daily average value sliding 11% over a monthly basis, coming in at S$1.3 billion compared to S$1.46 billion in March.

FX has been one of the strongest performing sectors during 2022, notably towards the Q1 end. However, the group’s latest volumes reflect a seasonal lull that has been observed across the retail and institutional trading industry heading into the summer season. For many institutional venues, including SGX, this resulted in a largely lackluster April, with platforms worldwide seeing a consolidation in their respective trading statistics.

Earlier in January, SGX completed the takeover of FX trading platform MaxxTrader to expand its reach in the foreign exchange space. Together with its wholly-owned subsidiary BidFX, SGX is now Asia’s largest FX derivatives exchange.

After five years operating as a division of TradingScreen, BidFX has emerged in 2017 as a standalone business focused on delivering a workflow solution for FX. Three years later, Singapore Exchange paid nearly $128 million to buy the 80 percent stake it does not own in BidFX. The transaction came as SGX was seeking to build its presence in foreign exchange futures and the over-the-counter market.

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