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MonFX receives MAS licence to provide foreign exchange derivatives in Singapore - The Straits Times

Assistant Business Editor

SINGAPORE - Commercial foreign exchange (FX) services firm MonFX on Monday (Dec 13) obtained a Capital Markets Services (CMS) licence from the Monetary Authority of Singapore (MAS), less than a year after commencing applications, said its chief executive Alvin Lai.

This will enable it to offer over-the-counter FX derivatives contracts to accredited or institutional investors, enabling them to trade derivatives to hedge their FX risks.

MonFX is part of UK-headquartered corporate FX specialist Monex Europe Holdings Limited, and has operated in Singapore since 2018.

Its Singapore office is the first in Asia, and the firm already holds an MAS Major Payment Institution licence, which enables it to provide FX and cross-border money transfer services from Singapore.

Western Union Business Solutions is one other company that holds both licences here. 

MonFX's dual licence status will enable it to "work with clients to structure solutions to manage their FX risks" at a time of heightened market volatility given the uncertainty of Omicron Covid-19 variant and its impact on the global economy, Mr Lai said.

It also comes amid diverging central bank strategies in the execution of monetary policy. "This week alone, central banks will be holding numerous policy meetings. Every country has a different view on monetary policy and currencies globally will swing in different ways," Mr Lai noted.

He added that having the tools to protect their bottom lines against the expected FX volatility is "critical for businesses, as an increase in FX rates when making payments to suppliers, for example, can wipe out a company's entire profit margin".

The Turkish lira, for instance, has lost around half its value against the US dollar this year, he said.

FX derivatives contracts include products such as forward contracts that allow businesses to lock in their FX rates in advance. "Such contracts are attractive to our customers as it gives them certainty and transparency, and protects against downside risks," Mr Lai said.

In a statement, MonFX said: "The company's dual licence status bears testament to its strong governance structure, track record and qualifications, as well as experience, while upping MonFX's ante another notch in both FX and payments."

The company now expects to scale its business here in terms of volume and headcount over the next three to five years.

"We expect to increase our headcount to 30-40 over the period from 10 currently," Mr Lai said.

At those levels, the Singapore office will be similar to the Amsterdam and Canadian offices. "We see a lot more upside in Singapore for this business."

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