Derivatives House of the Year, FX Derivatives House of the Year and Research & Strategy House of the Year — Citi
Ranked number one across products and regions, and with a proprietary technology platform built from scratch, Citi is positioned for a world where scale and breadth is vital — and the preserve of a handful of firms. Citi tops that pile in both flow business and structured solutions, and it has built a leading OTC clearing business to boot.
While other banks have spent time slimming down, Citi stands out for its full service commitment.
“We have an anti-niche strategy,” says Itay Tuchman, global head of FX at Citi.
With a presence in 98 countries, and trading floors in 78 markets, Citi is the big scale player in global derivatives.
That, combined with the robustness of its technology, proved its market leading credentials during the Covid-19 crisis. Christopher Perkins, global head of OTC clearing and FX prime brokerage, says: “We have this incredible backbone of people, technology and risk management architecture, coupled with robust processes and governance.”
A big feature of Citi’s competitive advantage has been in internalising its liquidity so it can offer clients best execution.
Having such a diverse client base drives this liquidity, says Tuchman.
“We are passionate about generating internalised liquidity so clients benefit from what other clients do with us,” he says.
“That creates a virtuous circle of greater liquidity and gives us a huge competitive advantage.”
Tuchman believes that as scale becomes vital, the industry will move away from the fragmentation of platforms, venues and liquidity to a more standardised world. Last year the bank undertook a benchmarking exercise on more than 50 FX venues and is in the process of untangling itself from more than half of them.
At the height of the Covid-19 crisis, Citi focused all of its technology efforts on supporting its clients, with the switch to mass working from home pushing some institutional investors to use the bank’s mobile FX trading app.
The coronavirus crisis makes looking longer term a challenge, but Tuchman says it is vital that Citi keeps it eye on its strategic goals.
“We continue to push on the big theme of electronification of execution to ensure [clients] have a broad suite of tools to execute foreign exchange transactions,” he says.
The firm’s mantra is to deliver high touch functionality in a digital low touch offering, such as adding solver functionality in its FX platforms. “Clients want this level of digital offering, freeing up our people to focus on solving complex problems for them,” says Tuchman.
Citi is the biggest clearer of OTC derivatives, meanwhile it integrated its FX prime brokerage platform under Perkins in 2018 — a logical move as more FX instruments move to a clearing model.
“We are bringing those platforms together and that intersection is absolutely over foreign exchange clearing and non-deliverable forwards (NDFs),” he says, “and we are leading the charge there in providing our clients with connectivity to NDF clearing as that migrates in.”
Citi has consistently been the number one structured note issuer and dealer of the last several years too. This business became a mainstream source of derivatives revenue and funding, which helped the bank through the nadir of the coronavirus crisis.
“As our clients needed us, we stepped up to the plate,” says Bhaavit Agrawal, global head of MTNs and private placements, rates and currencies. “The number of tickets we did in structured notes tripled between February and March. We were constantly there and our presence helped both our investor clients to capitalise on market opportunities and also our issuer clients who were looking for funding at that time.”