London based market research institute, Trading Authority on the 25th of June 2021, reported that Contract For Difference (CFD) trading grew – during the first half of this year – in the territory of Singapore. The research outfit also noted a significant increase in cryptocurrency-based CFD trading, on the back of this year’s bullish market action.
Singapore, as Trading Authority recognises, has become an important financial hub for the Asian continent. As such, CFD trading has exploded – in recent months – on the back of the island nation’s financial watchdog, the Monetary Authority of Singapore (MAS) assuming a friendly stance on CFDs, as well as the fact that the average Singaporean is more financially literate than counterparts, elsewhere in the world.
Owing to the fact that CFD trading platforms typically enable access to multiple types of financial instruments (Equities, Forex, Commodities, you name it,) on a single exchange, with fewer fees, and overall investor commitment than traditional markets, the activity has become a stable passtime for Singaporeans aged 22-55. With CFD trading, in the nation, being fully regulated, Trading Authority is of the opinion that it may be outstripping other financial products (structured warrants, equities) in use.
CFDs appear to offer an attractive risk/reward proposition for young investors, with the instrument’s ease of access and high leverage. So much so that trading in CFDs saw double digit growth over the first half of the year. This was – in part – due to Covid-19 lockdowns causing retail traders to seek more flexible investment opportunities.
Although trading of all commodities, grew rather rapidly on the back of US retail traders armed with stimulus cheques buying up meme stocks and influencing the uptake of similar behavior on CFD platforms for the rest of the world, digital assets traded through CFDs also saw a marked rise.The current crypto bullrun has not missed the CFD scene.
With CFD trading offering a more convenient, cash settled, trading experience than conventional digital asset trading, traders wishing to forego the risk and hassle associated with crypto trading have opted for trading the fledgling asset class via CFDs.
Perhaps spurred by the rate at which public companies have assumed digital asset positions, the recent spate of positive returns experienced by digital asset traders has led to a rise in digital asset-pegged CFD trading. This marks an interest in cryptocurrencies as a class of tradable asset, and may be a sign that digital assets may endure.
