Singapore's leverage trading market continues to contract toward pre-pandemic levels, yet maintains a significant market presence with 73,000 potential investors still showing interest in CFD trading, according to a new industry report by Investment Trends released today (Wednesday).

What is more, 60% of active investors expressed interest in the offerings of proprietary trading firms, confirming the growing importance of this sector in retail trading.

Singapore CFD Market Holds Ground but Retail Trading Base Shrinks

The latest research from Investment Trends reveals that while retail leveraged trader numbers are trending toward pre-pandemic levels, a substantial pool of online cash equities investors maintains an active interest in CFDs.

This transition marks a significant shift in trading motivations, with 47% of traders now primarily focused on profiting from specific market events, while leverage remains a crucial factor for 41% of participants.

“The data highlights an evolving dynamic in Singapore’s leverage trading market,” said Lorenzo Vignati, Associate Research Director at Investment Trends. “While active trader numbers have declined, the interest in CFDs remains significant, driven by sharp pricing and effective decision-support tools. This shift reflects changing trader priorities and signals an opportunity for the market to better meet evolving investor needs.”

Although Investment Trends reports that there are over 70,000 investors in Singapore interested in CFDs, the actual number of “active” participants is significantly lower (check the infographic above). In the report, activity is defined as investors who have opened at least one leveraged position in the past 12 months.

According to 2024 data, this group comprises 38,000 individuals, the lowest since 2019 and nearly 10,000 fewer than the 2021 peak, when the figure reached 47,000. The number of consistently active clients, however, has not changed as drastically. Three years ago, it stood at over 30,000, compared to the current figure of 26,000.

The number of traders is declining not only in the CFD sector but also across other markets. Two weeks ago, Investment Trends released a similar report revealing that Singapore's online trading community had shrunk to just under 250,000 active traders, down from 264,000 reported a year ago. The number of investors has fallen to its lowest level since 2018, marking the third consecutive period of decline.

Prop Trading on the Rise

The landscape is witnessing a notable surge in portfolio diversification, with traders actively incorporating CFDs alongside other investment products. Technological adoption is accelerating, with three in five traders either already engaged in or showing interest in prop trading.

Local regulations, however, may pose challenges for proprietary trading firms. Two months ago, Singapore-based MPFunds ceased operations, citing “regulatory decisions and strict enforcement within the local landscape” as the reasons for its closure.

Moreover, the integration of artificial intelligence in trading strategies has gained significant traction, with two-thirds of traders either utilizing or expressing openness to AI-assisted trading tools.

“The diversification of investment products and the integration of global innovations like AI-assisted trading reflect a more sophisticated trader base,” Vignati added. “The data clearly shows Singaporean traders are increasingly seeking cutting-edge tools and insights to enhance both trading opportunities and efficiency.”

Transparency and Cost Efficiency

The report also highlights a steady increase in switching intentions among traders over the past five years. Cost consciousness and execution quality have emerged as primary drivers for broker changes, with traders increasingly demanding transparency in their trading relationships. This trend suggests a maturing market where sophisticated traders are actively seeking partners that align with their evolving needs.

“Transparency is an increasingly vital factor for traders,” Vignati emphasized. “Those looking to switch are demanding not only lower costs but also more reliable and efficient trading experiences. Brokers who can deliver on these fronts will be well-positioned to win over this discerning segment.”

Singapore has become an important market for brokers, as highlighted in IG Group's fiscal year 2024 financial report. It was the only jurisdiction to report revenue growth last year, with larger clients driving a 6% increase in income through heightened trading activity. IG attributed the stronger trading revenue in Singapore to higher trading volumes from its largest clients.

The findings underscore Singapore's position as a dynamic trading hub, where traditional leverage trading practices are being reshaped by technological innovation and changing investor preferences.