Citi has begun a major revamp of its exchange-traded derivatives business in a bid to enhance electronic trading capabilities and prepare for the introduction of new venues designed for trading over-the-counter (OTC) derivatives.
As part of the overhaul, the bank has selected a derivatives trading platform from Fidessa, which will include implementation of the software vendor’s global order management system, low-latency execution platform and the BlueBox algorithmic trading engine.
According to Jerome Kemp, global head of exchange-traded derivatives at Citi, the decision to select an external provider rather than build a proprietary offering stemmed from the need to reduce time-to-market for the new offering.
The platform includes risk management functionality, market data capabilities and a global order routing service. Integrated with Citi’s proprietary back-office business systems, the rollout will be implemented in stages starting later this year.
“We are building a derivatives strategy that includes enhancing our electronic trading capabilities, as well as undergoing a revision of our entire internal architecture,” Kemp told theTRADEnews.com. “Our relationship with Fidessa allows us to move forward with these objectives in the most efficient way.”
“We have invested significantly to move our assets forward, including the architecture and functionality of the Fidessa sell-side trading platform, as well as our operational know-how,” added Stephen Barrow, global sales director at Fidessa. “This has enabled us to set a new benchmark with our fully managed, truly integrated, multi-asset global trading solution.”
Citi currently operates a number of disparate systems for derivatives trading globally. Kemp said the introduction of swap execution facilities (SEFs) – new venues for trading OTC derivatives in the US defined by the Dodd-Frank Act – was also part of the reason for the technology overhaul.
“We were thinking also about how markets could evolve over the coming years, relative to the introduction of SEFs,” he said. “We want to connect to SEFs when they arrive and more importantly create the linkages across the assets we will be able to trade on these platforms to facilitate our clients’ trading needs.”
Kemp joined Citi from J.P. Morgan last December as part of the bank’s push to revamp its exchange-traded derivatives and OTC clearing businesses. Citi also hired Conor Cunningham in August as Singapore-based head of its regional exchange-traded business in Asia and Antonio Reyes in March to lead its exchange-traded derivatives electronic execution product development team. Both Reyes and Cunningham were also at J.P. Morgan prior to joining Citi.