London Stock Exchange Group (LSEG) has announced plans to build a matching venue for non-deliverable forwards (NDFs) in Singapore. This venture will be supported by the Monetary Authority of Singapore (MAS), the jurisdiction’s central bank and primary financial regulator.
The venue, named NDF Matching, is expected to be open for integration testing before the end of 2022, with a full production launch expected in mid-2023.
LSEG explains that this represents the first leg of its plans to construct NDF and spot matching facilities in Asia, along with streaming relationship venues, in response to growing demand for NDF central limit order book (CLOB) trading venues and moves towards electronic trading and processing of FX globally.
The exchange group indicates that integration of clearing services into the design of NDF Matching will provide better access for all market participants to the venue’s full liquidity book.
This move is also a preliminary step in the LSEG’s programme to re-platform its FX venues using its core technology.
Singapore is the largest FX centre in Asia and the third-largest FX centre globally according to Bank of International Settlements data quoted by LSEG, albeit using data from a 2019 survey. This, it notes, is driven by the influx of the world’s largest FX dealers which have launched electronic FX trading engines within the SG1 data centre.
MAS executive director of the financial markets development department Lim Cheng Khai says: “LSEG’s decision to launch cleared NDF Matching in Singapore underscores Singapore’s position as a price discovery hub. As a leading inter-dealer platform, LSEG’s venue is a key addition to our FX ecosystem an will play an important role in meeting Asian market players’ growing FX needs.”
LSEG group head of FX Neill Penney says: “As a leading provider of FX and capital markets solutions, there has been a strong demand for LSEG to enter the NDF CLOB market as participants look for greater choice in where they execute.
“Singapore boasts a leading position as an FX hub and we are grateful for the support from MAS as we launch this new initiative. We look forward to bringing the benefits of this improved technology to our market-leading Spot Matching and FXall venues in future phases of our re-platforming.”
James Pearson, head of forexClear at LCH, comments: “ForexClear, and its divisional partners within LSEG, are excited to collaborate with the MAS to launch NDF matching in Singapore. It exemplifies not only the focus on Asia for LCH and across LSEG, but also the innovation possible within LSEG to create a trading platform where a broader array of market participants can decide on a pre-trade basis to clear their NDFs. Margin savings (driven by UMR), operational efficiencies, and credit intermediation advantages will be a fundamental feature of this industry-first platform.”
