Forex Trading Innovations in Asia

The fast-changing developments in technology can be difficult for many firms.

Forex Trading Innovations in Asia

Technology has been an important part of our lives for years. Especially, with the pandemic, it becomes more vital for nearly all individuals and businesses. While some firms adapt to technological changes and become successful to make money during the hard times of the pandemic. When we think about the importance of technology for businesses, the forex industry is one of the first sectors that come to our minds. 

With covid-19 forex firms that already use electronic trading have increased the volume of it and firms who have not used before have started to trade electronically. With the guidelines of the government, lockdowns, and home office obligations hindering traditional practices of currency trading, traders have accelerated their adoption of electronic and automated trading.

The COVID-19 global pandemic has changed the way people trade and interacts with each other. Forex industry has adopted enhanced rules and systems as well as some risk, compliance, and operational processes, all supported by technology.

Organizations recognized that a password like ‘ILoveIanCurtis21’ is more easily hacked than a two-step authentication via thumb or face recognition via a desktop or mobile app, and we responded to our customer needs to help. There are new liquidity providers (LPs) that provide liquidity aggregation, and established LPs that find new ways to distribute liquidity. Investors have more ways to enter the market and access liquidity.

With more ways to access the market, traders have used automated parameter-based execution methods for years. As customers become more comfortable and dependent on automation, FX is increasingly traded through algorithms (algos). Algos can help reduce market impact and slippage to achieve the best trading efficiencies, freeing traders time for more complex orders and workflow. 

Changes in Singapore Forex Industry

With the rise of algos and trading FX electronically, the importance of connectivity and technology becomes crucial. Singapore, the leading hub of electronic FX trading activity in Asia, FX traders are encouraged to join the FX ecosystem by the Monetary Authority of Singapore. Singapore’s Central Bank along with grants and tax incentives, 12 LPs, 6 liquidity takers, 9 electronic communications networks (ECN), platform or aggregators adopted into the SG1 trading infrastructure hub.

Singapore is well-positioned to become an FX hub in Southeast Asia, a region where increased international trade is driving the need for more sophisticated FX instruments and facilities. It also has direct, low-latency connectivity to countries in South Asia and the Asia-Pacific. With more banks, non-bank LPs, and other ecosystem players constantly building their FX trading and pricing engines at SG1, this will reduce significant millisecond delays in transactions routed to existing FX centers in Tokyo or London, thereby increasing Singapore’s attractiveness as a hub. Trade everything from major currencies to emerging market offerings, specifically localized deliverable and non-deliverable currencies.

See also: Algo Trading: The Basics and How It Works

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