Citibank has decided to waive assignment fees if the bank that does the trade also waives the fees for Citi. Traders and portfolio managers said Citi is trying to work out arrangements with other dealers on a reciprocal basis to tackle fees. Jon Calder, managing director of loan sales and trading at Citi, could not provide immediate comment. But investors are delighted with the move. “I really applaud that Citibank recognizes the current assignment situation is archaic, especially as they will be sacrificing a profit stream for the benefit of the asset class,” noted Scott Page, a portfolio manager at Eaton Vance Corp. Another loan participant said Citi’s initiative is good for liquidity as it will encourage other desks to waive fees. Some investment banks have waived fees, but this latest development is significant because Citi has such a massive share of the market. One portfolio manager said she is unsure if Citi has successfully negotiated with other agents but a trader at a rival desk said Citi’s unilateral decision was announced last week.
Fees have always been a major complaint, but the issue is taking on more urgency as the size of individual trades shrinks and asset management firms increase the number of funds that they run. Furthermore, modernization of the asset class through technology should have mitigated the need for an expensive fee of $3,500 per trade.
A couple of months ago Barry Zamore, a Credit Suisse First Boston trader, stirred up the buyside to act by sending out three emails to the buyside urging them to take action on the issue (LMW, 5/31). Last month a conference call was held with about 80 participants and sources said this track is also progressing.