Citi targets larger client share for revamped equities and prime brokerage business

Citi aims to capture increased business from existing and prospective hedge fund clients by offering a full coverage of pre- and post-trade services.

Citi has set its sights on capturing greater market share among equities and prime brokerage clients, following the US bank’s decision to combine the two units earlier this summer.

Following the merger of Citi’s equities, prime brokerage and securities services businesses into one unit, named equities and securities services (ESS), the bank is hoping to capture increased business from existing and prospective clients by offering a full coverage of pre- and post-trade services.

“The merger of our equities, prime finance and securities services businesses brings all of activities from the pre- to the post-trade under one roof. This ensures a holistic coverage of clients from advisory, trading and execution, financing, clearing and custody,” said Antonin Jullier, global head of sales and client executives, equity, prime finance and FCC, Citi. “By having one strategy across our cash and prime franchises, it means deeper relationships with our biggest clients.”

In addition to combating increased client and industry pressures, another driver behind this move was the increasing electronification of trading, especially among its hedge fund clients.

Prime brokerage is increasingly tied to electronic execution and considered a pathway to other products within the equities franchise such as research, equity derivatives, and synthetic financing. Citi views this trend as an opportunity to capture both the electronic equities and prime brokerage wallet through a combined offering.

“The trend towards electronification of trading and financing for hedge funds means we have had to adapt to this. The integration of our trading, execution, financing and securities services platforms into one coordinated effort will help create synergies and capture a larger share of business,” said Jullier.

Many of Citi’s prime brokerage rivals have also made the decision to invest in their electronic prime capabilities, including JP Morgan and Morgan Stanley, while BNP Paribas recently gained regulatory approval to takeover Deutsche Bank’s electronic equities and prime brokerage businesses. To take on its rivals, Citi has outlined a series of investments into its equities and prime brokerage technology, with a focus on electronification.

“Our investments have been focused on improving the performance of our algos, the speed and capacity of our systems, risk and margin calculation tools, and to offer an electronic swaps platform,” Jullier added.

According to rankings based on data collected by Preqin – as of July 2019 – Citi ranked eighth in terms of the number of hedge fund clients with 948, behind rivals including UBS, Bank of America and Credit Suisse. It also fell outside the top ranked investment banks for prime services revenues in 2018, according to research firm Coalition, as of March this year.