Market volatility has added impetus to derivatives trading in Singapore as new products expand the investor base.

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Data from SGX shows that within equities, FTSE China A50 Index Futures remain the primary contract for China risk management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term, with Q1 daily average volumes of 548,000 lots (approximately $8 billion). FTSE Taiwan Index Futures reached a record Q1 daily average volume of 74,000 lots ($9.7 billion), supported by strong liquidity and diversified index construction.

Equity and FX Derivatives Drive Growth

Micro FTSE Taiwan Index Futures continue to gain traction, recording daily average volumes of 8,400 lots ($90 million), particularly among retail and active traders in Asia. India-related derivatives have also seen rising engagement, reflecting India’s growing weight in global and emerging market portfolios.

In commodities, SGX continues to see strong participation across iron ore, fuel oil and freight derivatives, with sustained activity over February and March as market participants managed price and shipping cost volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad Read this Term.

Victor Chia, head of client success (dealing) at Orient Futures Singapore, says it should come as no surprise that FX, equity and commodity derivatives have all experienced strong activity as these are natural asset classes that are directly and immediately impacted by news flow and geopolitical developments.

While cautioning that market conditions continue to evolve and what drove volumes in the past year may not necessarily persist, he accepts that the current global environment has reinforced rather than weakened the case for operating out of Singapore.

“Singapore has continued to demonstrate resilience and consistency, even as parts of the global landscape have been affected by recent geopolitical and economic disruptions,” says Chia. “In periods of uncertainty, this stability is not merely advantageous but highly valued by firms seeking a reliable operating base.”

Demand is driven by leverage and efficient access to different assets and in Singapore, this is reinforced by its position as a regional hedging hub for Asian exposures, particularly for global investors.

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“Recent periods of uncertainty have also caused investors to reposition their portfolios to hedge against the noise,” observes Carlos Lim, group head of securities and leveraged products, CGS International Securities.

Singapore’s Role as a Regional Hedging Hub

Derivatives have become an essential tool for hedging positions, diversifying portfolios and managing exposure across global markets. More broadly, Singapore's status as a premier global financial centre - combined with SGX's international marketplace for Asian derivatives - makes it a natural hub for global trading activity.

“In the first quarter of the year we reported an increase in futures and options volumes on our platform,” says Yujun Lin, CEO of Interactive Brokers Singapore. “Global client trading volume in futures and options grew 20% and 16% respectively compared to the same period in 2025.”

Lian Tuck Lee, head of listed derivatives (Asia) at StoneX, refers to sustained growth in derivatives volumes across global exchanges as market participants seek risk management tools to manage exposure during periods of heightened volatility.

“International investors increasingly use Asian-listed contracts to access and hedge exposures to major markets such as China and India, where onshore access is limited,” he says. “Global investors are allocating more capital to Asian assets, creating a corresponding need for efficient hedging and risk transfer mechanisms.”

Singapore benefits directly from this dynamic, acting as a neutral and well-regulated platform where international and regional flows converge. The introduction of new derivatives contracts - including those tied to emerging markets and non-Asian exposures - has widened the investor base and strengthened Singapore’s role in global price discovery.

“FX derivatives such as USD/CNH and INR/USD have shown the strongest growth this year, reflecting heightened currency volatility and increased hedging of cross-border exposures,” he says. “This mirrors global trends where FX markets remain highly sensitive to interest rate divergence and increased capital flows into Asia.”

In addition, commodity derivatives such as iron ore/metal derivatives have registered record trading volumes and open interest levels, supported by global supply chain disruptions and China-driven demand cycles.

Retail Participation Expands

Andreas Wigström, managing director of LMAX Global, references demand for CFDs from institutional and professional participants using these instruments to manage short-term risk and gain flexible exposure across markets.

“We are also seeing increased engagement in perpetual futures, particularly where investors are looking for continuous exposure without the need to manage contract expiries,” he adds. “Across all of these products, growth has been driven by a focus on transparent pricing, resilient liquidity and reliable execution, reflecting a broader shift towards more disciplined trading strategies.”

The surge in gold price momentum has increased intra-day and intra-week price swings in an asset class that has historically traded with relatively more stability, prompting speculators to participate alongside safe-haven buyers and broadening the base of retail participants trading gold CFDs, explains Jaycee Lai, head of client services at IG Singapore.

“We also see growing interest in the Dow Jones Industrial Average index,” he adds. “Unlike the S&P 500, its composition carries greater weighting toward defensive and cyclical sectors such as industrials, healthcare, consumer staples and energy. This shows that retail investors are slowly rotating or seeking more defensively-positioned index exposure, without fully exiting US market exposure.”

In an environment where macro uncertainty is high but US equities markets are inching higher, this kind of nuanced positioning is exactly what derivatives products are designed to facilitate.

US Market Exposure Fuels Demand

Retail investors now have better and more accessible educational resources to use derivatives for portfolio diversification and risk management, leading to increased participation, observes Yaki Razmovich, managing director of eToro Singapore and Asia.

“Many platforms now offer intuitive, mobile-first experiences alongside AI-powered insights, helping retail traders better identify and manage opportunities,” he says. “In addition, more efficient trading infrastructure and lower capital requirements have enabled investors to trade smaller positions, lowering the entry barriers for a broader audience.”

Retail investors have increased their participation in US markets and as trading activity extends across time zones, demand naturally carries over into derivatives for managing short-term risk and expressing market views, says Jonathan Man, CEO of Webull Securities (Singapore).

“The strongest growth this year has been in broad-market US ETF options, particularly SPY and QQQ, which are often the first instruments investors use for liquid exposure and to adjust portfolio beta around macro events,” he says.

Single stock options remain active in names like TSLA and NVDA, where investors are focused on AI-driven growth, earnings sensitivity and event-driven volatility. On the futures side, the firm has seen strong momentum in commodities such as Micro WTI Crude Oil, Micro Gold and Micro E-mini S&P 500. Smaller contract sizes have been key, allowing investors to scale exposure more precisely.