US investment bank Citi has confirmed that it has cut the number of FX trading platforms it uses, and now requires vendors adhere to the FX Global Code of Conduct before entering partnerships.
Citi said that following an initial review and scorecard assessment of its 53 FX vendor platforms, it has decided to switch off and terminate connections to 12 platforms in a bid to simplify connectivity and reduce its maintenance costs.
Furthermore, Citi has laid out a new set of requirements for platforms to do business with Citi’s FX division, including adherence to the FX Global Code of Conduct. Citi added it was the first major bank to sign up to the FX Global Code, and it is committed to its principles of best practice.
“Citi’s scorecard considers a number of key principles within the FX Global Code,” said Alaa Saeed, global head of Citi’s FX electronic platforms and distribution. “We found notable findings in relation to a number of key principles, including but not limited to, interaction with our liquidity, order management; market impact; liquidity aggregation, order routing logic; platform stability; testing of new products and coordinated releases.”
Other requirements that Citi said its platforms are assessed include the availability of swap execution facility (SEF) and multilateral trading facility (MTF) venues, functional offerings, broker rate card, transparency around interaction with Citi liquidity, among other aspects.
“We hope this approach will increase standards and competition across all vendors,” Brian McCappin, global head of Citi FX institutional sales, added.
Launched in May 2017, the FX Global Code of Conduct does not impose a legal or regulatory obligation for compliance. Instead, it outlines 55 principles to address a variety of major issues including ethics, governance, execution, information sharing, risk management, compliance, confirmation and settlement, as a set of guidelines for FX market participants.
Asset managers and buy-side firms have been slow to adopt the Code of Conduct, labelling it regulation in disguise, and more relevant to the sell-side. Some of the world’s largest asset managers have yet to sign up, whereas 30 major sell-side institutions, including Citi, Goldman Sachs, JP Morgan, HSBC and Barclays, have agreed to its terms.