The hold that the foreign exchange asset class has on retail investors in Singapore has slipped over the past year, according to SRP data. While there has been a decrease in both issuance and volume compared with same period last year, the trend is moving slowly to other asset classes, although FX is still the dominant underlying, particularly through dual currency deposits. The rising interest in structured products especially includes equities as an underlying, according to Tan Siew Lee, head of wealth management Singapore at OCBC Bank.
Standard Chartered was the most active provider over the last quarter and half year, mainly through the provision of FX-linked deposit. The bank had an around 30% market share.
|
|
Apr to Jun 15 |
Jan to Mar 15 |
Jan to Jun 15 |
Jan to Jun 14 |
|
Products added |
26 / SGD16,013m ($11,889m) |
25 / SGD15,665m ($11,631m) |
51 / SGD31,679m ($23,520m) |
62 / SGD36,179m ($26,862m) |
|
Products striking |
26 / SGD16,013m ($11,889m) |
25 / SGD15,665m ($11,631m) |
51 / SGD31,679m ($23,520m) |
62 / SGD36,179m ($26,862m) |
|
Products matured |
35 / SGD15,840m ($11,761m) |
31 / SGD15,786m ($11,720m) |
66 / SGD31,626m ($23,481m) |
76 / SGD36,978m ($27,455m) |
Although FX-linked products still dominate the market, the asset class has lost some traction when comparing to the same period last year. Nevertheless, the trend is expected to remain important for the market unless there are major changes in regulations.
And those regulatory initiatives may be on their way, following the publication by the Monetary Authority of Singapore (MAS) of a regulatory framework for over-the-counter (OTC) intermediaries on dealing in derivative contracts and execution-related advice. The least that will follow from new regulation will be increased costs, according to Rosabel Ng, partner and head of the derivatives and structured products practice at Wong Partnership
There was an increase in issuance and volume over the second quarter of the year, according to SRP data. The market was also notable for the addition of digital and puttable payoff product in retail between April and June 2015, issued by CIMB.
As flow products are the main products in the retail, growth products dominated. Stanchart issued an income product linked to the Singapore interest rate, while, for growth and income products, United Overseas Bank issued two share basket-linked products and Maybank issued an interest rate-linked product.
Click here to read the full Singapore market review for June 2015.
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