Best liquidity provider for corporates and Best single-dealer platform: Citi

 

Citi discusses its win of two FX Markets e-FX 2022 awards, and the role its client-focused single-dealer platform had to play in its win

As a global bank with one of the largest and most robust FX franchises on the market, Citi continually strives to enhance the services it offers its clients, particularly by broadening and deepening overall user experience on single-dealer platform (SDP). It is only through the platform that the bank can offer its clients the full breadth of its FX offering and provide its impressive selection of FX solutions to market participants worldwide, including corporates.

Citi has long catered for its FX corporate clients. With a presence in numerous jurisdictions worldwide, the bank is especially well placed to offer corporates the broadest choice of currencies in the local markets in which they operate, including those that aren’t otherwise widely traded on international financial markets. Unlike other buy-side participants, corporates’ need for FX liquidity rests on their ability to conduct commercial activity in their operating markets, including paying their suppliers and employees in the local currency, and receiving payments from customers and hedging their local FX exposure according to the regulatory requirements of the countries in question.

Over the past decade, Citi has worked tirelessly to deepen its provision of FX liquidity across products and jurisdictions for its corporate client base and, in recent years, its priority has been to make the bulk of that liquidity available through electronic means. In frontier markets, challenges were experienced since many of these markets are not widely traded on international markets but, by virtue of the substantial incoming and outgoing client payments that Citi manages daily, the bank has made great progress in electronifying that internal flow on its corporate FX platform, CitiFX Pulse.

CitiFX Pulse provides unparalleled real-time market access to FX spot, forwards, non-deliverable forwards (NDFs) and swaps, pricing in more than 500 currency pairs, 24 hours a day.

“At Citi, our ethos as a global bank is to support our clients as they expand their businesses globally by ensuring we are there for them in as many places as possible,” says Yi Hahn Chin, global head of e-FX solutions sales at Citi. “Therefore, within the context of electronic FX, we have been religiously focused on being able to deliver our FX services electronically in sufficient depth of liquidity in as many currencies and instruments as possible.”

While electronifying frontier FX markets has been central to Citi’s approach in the past decade, the consideration for improving electronic means of liquidity provision was always about more than just ushering in streaming rates and real-time electronic pricing and execution. The prevailing motivation was to increase the efficiency in which corporates could manage the entire lifecycle of all their FX needs with as much transparency as possible, and simplifying FX workflows with the underlying documentation necessary to support each FX transaction in line with local requirements.

“To avail our clients, in these markets, with electronic liquidity wasn’t easy,” explains Chin. “We had to work with each central bank to clear the digital practices and processes we were implementing, and consult local legal experts and partners to ensure these conformed with local languages and cultures so that our clients would be completely comfortable with what we were offering.”

With the increasing popularity of NDFs as a hedging instrument in recent years, particularly for emerging market and frontier currencies subject to restrictions on physical FX delivery, electronifying its liquidity provision of the product has been a top priority for Citi. The most common NDF currencies – such as the Indian rupee, Taiwanese dollar, Korean won and Brazilian real – have been available to trade on CitiFX for some time, but it’s the more illiquid legal tenders Citi has focused on in recent times. This has yielded substantial results of late, with the Peruvian sol, Colombian peso and Kazakhstani tenge the latest currencies in which Citi’s clients can trade NDF contracts electronically.

The timing is opportune, as volatility in the overall FX market has picked up considerably over the past 12 months amid economic uncertainty, rising inflation, interest rate increases and general geopolitical turmoil. To minimise overall FX risk exposure, corporates have therefore turned to NDFs, and consequently, the trading of the product on Citi’s SDP has skyrocketed in the past year.

Differentiating the client experience

While Citi’s clients can access the bank’s liquidity on a large swath of multi-dealer platforms (MDPs) via a single application programming interface, it is through its SDP that the bank prefers to interact with clients. On external venues, Citi can only stream prices and provide very little added value. It is only through its SDP that Citi believes it can truly differentiate its offering and provide its clients the best experience the bank can offer.

As such, Citi continually adds new features to the platform, such as the recently launched algorithmic execution suite, the enriched analytics to provide its clients with top-notch pre- and post-trade analysis, and the new order types that are in high demand, such as loop orders that clients use to hedge their gamma positions.

“Client experience has become a thematic priority at Citi,” explains Ala’a Saeed, global head of electronic platforms and distribution at Citi. “We want to make sure clients have a good experience when dealing with us from front to back, whether that’s when onboarding the platform, on the platform itself or during the post-trade lifecycle. We really emphasise the client experience across the platform as a whole and continue to invest in making that better because that’s something we can differentiate and control.

“Where Citi really excels and where we are particularly strong is in the provision of proprietary platform solutions to clients,” he says. “We do really well across both the corporate and institutional landscape in bringing together all parts of Citi and all the supporting functions, teams and services around the platform offering.”

The breadth of Citi’s FX franchise – corporate or institutional – means that, in addition to pure liquidity provision, the bank can provide a wide range of bespoke services spanning structuring, solutions, exposure management, hedge policy, cashflow forecasting, contingent trades or e-commerce solutions. All of these are services the bank cannot make available to its clients on MDPs or anywhere else.

For corporates, this packaging of lifecycle services means CitiFX Pulse can be synced and connected directly with the various systems and solutions they require – market research, treasury, order management and payment systems, post-trade settlement, reconciliation and analytics tools – for a smooth and efficient workflow. With such a holistic system, clients can adopt a more rules-based model where orders can be routed according to a specific set of predetermined requirements.

“What differentiates us is the ability to customise a market access workflow or liquidity provision for them,” says Saeed. “That’s something only a mature and established team can do. It’s not something an incumbent team can do, it’s not something a tech vendor with only a partial view of a client’s business can do. It requires the full end-to-end interaction.”

To manage the set of solutions at their disposal, Citi’s clients are given advanced control functions, which provide them with full visibility into the activities of their end-clients and end-users, and set limits, entitlements, access hours and restrict access to specific computers and IP addresses, tools that were in great demand in the early days of the Covid-19 pandemic.

 

Citi was named Best liquidity provider for corporates and Best single-dealer platform at the 2022 FX Markets e-FX Awards.

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