A Singapore currency platform has won financial backing from HSBC Holdings Plc and Citigroup Inc. just as its trading volume more than doubled on coronavirus-driven volatility.
HSBC and Citi join Goldman Sachs Group Inc. as investors in Spark Systems after taking part in Series B funding, which has raised $ 16.5 million over two rounds, according to CEO Wong Joo Seng.
Citi and HSBC representatives confirmed that their companies have invested in Spark. OSK Ventures International Bhd., A Kuala Lumpur-based investment company, also participated in the current round, which brought the company’s valuation to $ 70.5 million, Wong said.
Wong said the amount collected would be sufficient for the next three and a half years, although more investors will participate in the current round later in the year.
The timing of the collection has been favorable. Forex trading skyrocketed across the globe earlier this year as panic sales in the coronavirus-induced market meltdown triggered a storm of dollars, prompting demand for lightning-fast prices.
“Trade began to rise until the end of February, just as the infection spread,” Wong said.
Singapore, already Asia’s largest currency trading hub, is waiting for the world’s best banks to establish electronic pricing engines in the city state to win a larger slice of the $ 6.6 trillion-day currency market. Spark is currently offering customers prices from banks such as JPMorgan Chase & Co. and UBS Group AG, which has pricing systems set up in Singapore according to Wong.
“We are executed in Singapore on a one to two millisecond time basis,” he said, noting that executions in London or New York could take on the order of 380 milliseconds, so the time savings from the regional operation are significant.
That start up, which is supported by the Singapore Monetary Authority, recorded an average of $ 5.5 billion. $ a day during the first quarter, up from $ 2.5 billion over the same period in 2019. But the slowing global economy is now beginning to dampen activity in the second quarter, Wong said, with average trading volume slipping to $ 4, $ 5 billion to $ 5 billion a day.
“If you have a GDP shrinkage, if you have several businesses that are hit hard, it will affect the level of economic activity and the amount of forex traded,” he said.
The vast majority of the firm’s trades currently involve Group-of-Ten assets, but Wong sees opportunities for the firm to expand its capabilities in emerging markets such as the Korean won, the Chinese yuan, the Malaysian ringgit and the Indonesian rupiah.
“We see Singapore as a very natural hub for the company’s treasury and price discovery for new foreign exchange markets,” he said. “We want to be the center where it’s traded.”