Another acquisition on the way?

Exclusive: Citi to Offload Retail Business CitiFX Pro

Finance Magnates has learned that tightened liquidity conditions have pushed Citi to look for a buyer for its brokerage.

Citigroup’s foreign exchange (FX) broker is close to a sale to an established player in the retail segment of the market, Finance Magnates has learned from several sources.

The news comes just three months after the Swiss National Bank (SNB) abruptly abolished the floor from the Swiss franc exchange rate, prompting liquidity providers to tighten their conditions.

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After the SNB move, a number of banks have tightened margin and capital requirements, forcing several retail brokerages to look for alternative liquidity providers. In reassessing the risks, some LPs have sent notices to their clients about changes to their accounts, while others simply received termination notices. In particular, the aftermath of the Black Swan event it saw Citi suffering $150 million in losses.

CitiFX Pro’s solid client base would set any retail broker as a robust market player

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It is understood that the majority of the clients of CitiFX Pro are institutional investors, with a collective deposits pool of over $50 million. As the broker relies heavily on liquidity from the bank’s own liquidity providing unit, it seems the tightened conditions have pushed the management to put it on the market.

With a solid client base and the strong impact that such a deal could have for a company’s profile, positioning it as a robust market player, it is hardly surprising that established retail brokers were bidding for the asset.

CitiFX Pro is not the first retail foreign exchange unit operated by a major bank to close down. In 2011, Deutsche Bank parted with its dbFX retail unit after selling the clients list to GAIN Capital. In a recent interview with the company’s CEO, Glenn Stevens stated that the company is “looking for further acquisitions in the UK”.

CitiFX Pro is said to possess a customer base of mainly of U.S. clients. However, in the wake of the SNB, there could only a handful of companies which are interested in acquiring new clients in the U.S.

Finance Magnates reached out to CitiFX who stated that, “we do not comment on rumors or speculation.”

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