CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Between 54-87% of retail CFD accounts lose money. Based on 69 brokers who display this data. *Availability subject to regulation.
Singapore’s financial services sector has its origins from its secession and independence from Britain as of 1965. Strategically located on the southern tip of the Malaysian Peninsula, Singapore is a leading regional economy despite its status as an island city state with a population of only 5.9 million.
The primary stock market in Singapore is the Singapore Exchange (SGX). The exchange holds international offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, Shanghai, San Francisco and Tokyo.
The SGX was formed in December of 1999 following the merger of Stock Exchange of Singapore (SES) with the Singapore International Monetary Exchange (SIMEX). The SGX exchange lists stocks and warrants, exchange traded funds (ETFs), American Depository Receipts (ADRs), trusts, including Real Estate Investment Trusts (REITs) and Business Trusts among its securities products. The exchange also lists fixed income products, derivatives, commodities, currencies and indices.
The primary stock market index for the SGX is the FTSE Straits Times Index (STI) a capitalisation weighted index that acts as the market benchmark. Its value is based on the performance of the 30 top companies listed on the SGX. The various former SGX indices were renamed iEdge indices in 2018, and that change includes the TR/iEdge SFI Index for fixed income products and the iEdge SG ESG Leaders Index.
Singapore’s national currency is the Singapore dollar (SGD), which can then be subdivided further into 100 units called cents. The Bank for International Settlements (BIS) ranked the SGD as the 12th most commonly traded currency in 2016, stating that it made up about 1.8% of the overall forex turnover that year. The SGD did not rank separately among the reserve currencies that were popular among central banks, as per the International Monetary Fund (IMF).
The Monetary Authority of Singapore (MAS) acts as the central bank when it comes to overseeing and managing exchange rate movements through market intervention whilst ensuring monetary and financial stability in Singapore. It was formed in 1971 and became effective through the MAS Act of 1970.
The MAS is also the principal financial sector regulator in Singapore that both supervises and provides guidelines for financial institutions and insurance companies throughout Singapore. Moreover, the MAS also acts as the sole regulator overseeing forex brokers based in Singapore. Consequently, forex and CFD brokers need to be authorised by the MAS and commit to complying with the central bank’s strict standards prior to accepting clients.
Traders from Singapore looking for an online broker to execute forex or derivative trading such as contracts for difference (CFD) trading should be able to find many foreign brokers to cater for their needs, with the prerequisite of the broker being authorised by the MAS.
Brokers having MAS supervision will typically be preferable for traders from Singapore due to their obligation of upholding a good reputation with Singapore’s central bank. Moreover, it should also be possible to litigate locally in Singapore should a dispute arise with the broker.
As a general principal, any foreign broker needs to be well regulated in a strict jurisdiction. This will ensure governance principals such as ensuring clients’ funds are separate from the broker assets. Brokers should also cater for a satisfactory range of services and have earned a good reputation with their clients to be considered as a potential trading partner.
Another factor to consider, is that many online brokers provide virtual money-funded demo accounts that traders can use to practice trading, check out their trading platform and a platform to test strategies. Moreover, brokers also offer funded accounts where traders need to provide a minimum initial deposit to start live trading. Many brokers will also cater to Sharia compliant traders in Singapore by providing Sharia law compliant or Islamic accounts without swaps on rollovers.
If language is an important consideration, be sure to check that the broker’s website and customer support offers services in your preferred language, whether it be English, Mandarin, Malay or Tamil. The vast majority of online brokers will allow you to communicate with them and view their websites in English, although some might provide support for Malay or Tamil. Therefore, an idea may be to inquire ahead of time about any language requirements.
Additionally, regarding stock trading, the SGX aims to provide a fair and transparent market in various asset classes, including Singapore based and foreign stocks. SEX trades are generally executed in SGD, although they can also be executed in U.S. dollars since 2012 under its dual currency trading system. Moreover, as of August of 2004, the Singapore Exchange uses the trading software called SGX QUEST, an abbreviation of the SGX Quotation and Execution System. This system is employed for securities and derivatives trading on the SGX.
According to export.gov, Singapore presents opportunities in several market sectors, including healthcare and medical technology, energy and environment (oil and gas, water), defence and aviation, and information communication technology (ICT) and digital technologies (smart grids, FinTech, , smart cities, ecommerce).
Singapore also has some major ongoing infrastructure projects with significant government contracts. These include:
With respect to enforcing contracts, Singapore ranked at the top of the list of countries surveyed by the World Bank. For overall ease of doing business, Singapore ranked an impressive second behind New Zealand, while the city state ranked third for starting a business. Other areas where Singapore ranked highly include protecting minority investors, paying taxes and dealing with construction permits, ranking 7th, 8th and 8th respectively.
Asian countries remain some of Singapore’s top and closest trading partners, including China, Hong Kong/China, Malaysia, Indonesia and Japan. Consequently, since China is Singapore’s main trading partner, the current trade dispute between the United States and China might indirectly affect trade with China.
Singapore is a consistent net exporter with a positive trade balance, so the imposition of trade tariffs, trade wars and the failure of key trade agreements with China could potentially adversely affect the economy of the city state. Moreover, based on data compiled by the World Bank in 2017, Singapore’s extremely high trade to GDP ratio of 322.4 could imply an increase in the economy’s exposure to trade disruptions. Lastly, the World Bank also ranked Singapore 45th in regards to trading across borders, 32nd in obtaining credit and 27th in resolving insolvencies.
Overall, traders and businesses looking to operate in Singapore should find the country a fairly secure place to do business, especially regarding the financial services sector due to the strict oversight of the MAS. Moreover, as ranked by the World Bank Singapore also has a top ranking for enforcing contracts and ranked second overall for ease of doing business, offering a relatively competitive and safe place for a business to operate.
Traders seeking an online broker to trade with from Singapore should find one authorised by the MAS and that offers a sufficiently broad range of asset classes and full featured trading platform. Furthermore, a broker should also enjoy a good reputation with clients, be competently regulated in its local jurisdiction and segregate its clients’ money from its own funds.