29 Sep 1998...Financial institutions in Singapore participated in the global survey of the turnover of foreign exchange markets coordinated by the Bank for International Settlements (BIS). The triennial survey, which covered 43 countries, was the fourth in the series of BIS surveys.

Foreign Exchange

2   The results of the Singapore survey showed that the average daily volume of foreign exchange trading in Singapore on a "net" basis (i.e. after adjusting for transactions among financial institutions in Singapore) increased from US$105.4b in April 1995 to US$139b in April 1998. This represents an increase of 31.9%. "Gross" average daily turnover in the Singapore foreign exchange market for April 1998 was US$157.6b, 26.5% higher than in April 1995.

3   Singapore's foreign exchange market is international in character and centred on the major currencies. US$/Y and US$/DM transactions constituted 21.5% and 16.2%, respectively, of the total foreign exchange turnover in April 1998. Transactions involving the S$ averaged US$17.6b daily to account for 12.7% of total turnover. This is significantly higher than in 1995, signifying the increased depth of the S$ market. The bulk of the S$ market comprised US$/S$ transactions, accounting for 12.4% of total turnover. Please see Table 1.

Table 1: Major Currencies Traded

4   The survey also revealed that Singapore's foreign exchange market remains dominated by foreign exchange swap and spot transactions, which made up 53.7% and 43.1%, respectively, of total foreign exchange transactions. The remaining 3.2% comprised outright forward transactions. These proportions are little changed from 1995. Please see Table 2 below.

Table 2: Average Daily Foreign Exchange Turnover (Net Basis)

5   Of the total foreign exchange turnover, 86% were transactions between financial institutions. Transactions amongst Singapore-based financial institutions made up 22.4% of all foreign exchange transactions. Transactions with non-bank customers accounted for 14% of total trading volume, up from 6.4% in 1995. Please see Table 3. The increasing importance of non-bank transactions reflects the growing use of Singapore as a regional base for corporations to operate their treasury operations.

Table 3: Counterparties - Foreign Exchange

Derivatives

6   Average daily volume of foreign exchange derivatives trading in April 1998 on a "net" basis had increased 227.8% to US$5.9b. OTC Options accounted for US$4.6b or 78% of total foreign exchange derivatives transactions. Currency swaps made up the remaining US$1.3b. Please refer to Table 4.

7   US$5.3b of single currency interest rate derivatives were transacted daily in April 1998, a 67.3% decrease from 1995's US$16.2b. Interest rate swaps (IRS) transactions accounted for US$4.2b or 79.2% of total single currency interest rate derivatives. Forward Rate Agreements (FRAs) constituted another 20.8% of single currency interest rate derivatives. Please refer to Table 4.

Table 4: Average Daily Derivatives Turnover (Net Basis)