Singapore’s
leverage trading market continues to contract toward pre-pandemic levels, yet
maintains 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 online cash
equities investors maintains 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.