London has retained its position as the preeminent foreign exchange (FX) and payment centre globally and despite post-Brexit challenges remains the dominant offshore hub for trading the Chinese renminbi (RMB), reports SWIFT.
The financial messaging services provider’s latest monthly RMB Tracker shows that as of March 2017, according to its data 36.3% of the RMB FX transactions (excluding China) are conducted with the UK.
Hong Kong is second (29.3%) and the United States and France third (7.3%) ahead of Singapore (5%). There has also been a steady increase in RMB FX transactions over the past five years, with the number of FX trades in RMB reaching more than 13m in 2016.
SWIFT’s latest report from the tracker focuses on the City of London as an offshore RMB hub and includes statistics and analysis for the first three months of 2017, as well as insights about the RMB and the state of play in London’s FX market.
Other FX highlights from the report include:
- RMB ranks fifth as a world FX currency in terms of trading value, behind the US dollar (USD), euro (EUR), yen (JPY) and sterling (GBP).
- RMB and USD is the fifth highest currency pair in nominal amount for trades not settled in continuous linked settlement (CLS).
- Monthly turnover of the RMB has reached over 4.3% of total turnover confirmed over SWIFT (as of March 2017).
Trading and payments in RMB in the UK also continues to grow, supported by usage of the RMB in both global and domestic markets. While payments to and from the UK transverse a multitude of markets around the world, SWIFT data shows that the UK-US corridor was the most important, accounting for 38% of international payments sent and received by the UK in March. Additional payments insights from the report include:
- More than 50% of UK payments transactions (all currencies) are conducted with two countries, US (38%) and Germany (16%).
- RMB is the top currency for payments between the UK and China/Hong Kong.
- Half of the financial institutions in the UK (and 1,300 financial institutions around the world) are using the RMB to exchange payments with Hong Kong and China.
- London is the largest RMB payments centre outside of greater China with a 5.66% share (behind Hong Kong with a 76.14% activity share but well above Singapore at 4.19%).
“This data demonstrates that London is a top choice for international banking activity,” said Javier Pérez-Tasso, chief executive officer (CEO), Americas and UK at SWIFT. “Despite a decline in global FX trading volumes and broader market uncertainties, London’s role as a global financial centre and international payments hub remains on a strong footing.”
The top five sectors Asian fintech investors are interested in are data analytics, blockchain, lending, payments and regtech, according to Gary Hwa, EY regional managing partner.
On the third day of the Singapore Fintech Festival conference, there was a focus on specific applications of fintech innovation. One was trade finance, which is clearly is ripe for a revolution.
Kicking off day two of the Singapore Fintech Festival, Deloitte Chairman David Cruikshank said that fintech is significant for three reasons. First, customer expectations of services are higher than ever. Second, barriers to entry are lower than before. And finally, financial institutions (FIs) face a threat of what a competitor might do.
The EU and US’ shift in accounting standards may bring balance sheet losses and increase credit risk, according to James Elder, director of risk services at Standard & Poor’s (S&P) Global.