Media Releases
Published Date: 25 October 2000

Survey of Singapore Treasury Activities in 1999

Singapore Treasury Industry Continues to See Robust Growth
Industry Sees Diversification Into Capital and Money Market Activities

25 October 2000, Singapore... The Singapore Foreign Exchange Market Committee (SFEMC) today released its survey of the Singapore treasury activities in 1999, which showed a continued robust growth of the treasury market. Total treasury revenue for 1999 rose 12.5% from the previous year to a record S$5.4 billion. Total treasury profits increased substantially by 30% to S$4.3 billion in the same period. This is the highest total profits posted since the inception of the survey of treasury activities in 1991. Average revenue per dealer has been on the uptrend since 1996, rising to S$2.5 million last year. Total costs also fell by 27% last year, from S$1.5 billion in 1998 to S$1.1 billion in 1999.

The survey also shows a diversification of the Singapore treasury industry to new growth areas. Combined money market and capital market activities generated 81% of total treasury revenue last year. This is almost double the contribution for the previous year. Initiatives introduced to develop the Singapore capital market have contributed to the growth of capital market activities. The increased maturity and greater awareness of risk management among Asian corporates post-crisis have also led to a stronger demand for more sophisticated hedging products, contributing to the growth of capital market activities.

In line with global trends, foreign exchange activity continued to slow down last year. The introduction of the Euro last year has led to a loss of intra-European currency trading opportunities. The advent of electronic trading systems has also led to greater competition and resulted in lower profit margins. Reflecting these global trends, the average daily foreign exchange trading volume for Singapore in 1999 was US$115.1 billion, a decline of 19% from the previous year.

Said Ms Jeanette Wong, Chairman of the SFEMC, "Consolidation in the treasury industry has been ongoing for some time. As with other centres worldwide, we have seen a gradual decline in the volume of foreign exchange trading here, due in part to the lower market volatility, post-crisis. However, we can see the dominance of money market and capital market activities in 1999, reflecting the greater maturity and diversity of the treasury industry in Singapore. More dealers are moving into higher value-add areas such as advisory services, and offering more sophisticated derivative products. We are thus looking forward to the development of a more mature market here, with banks offering a full range of treasury services."

Looking ahead, treasury market players were optimistic about the continued growth in demand for higher value added products in Asia. 15% of the financial institutions surveyed indicated that they are already offering a wider range of structured products, including credit derivatives, asset-backed securities, equity derivatives and other asset-liability management instruments. Market players were also confident that the Singapore treasury industry will grow in sophistication. Instead of simply executing plain vanilla trades, treasury players here are increasingly providing more value-added services such as offering advisory services, and more sophisticated capital market products.

Started in 1986, the SFEMC is a private-sector body of leading Treasury professionals, whose purpose is to foster the growth of Singapore as a leading international centre for transactions in financial market instruments. Full survey results is available here (107.2 KB).