After launching a review back in October of last year, Citi has confirmed that it is reducing its global ambitions in the foreign exchange (forex) space by shedding nearly two-thirds of the trading platforms it gives currency quotes.
According to a report from the Financial Times this Monday, the move confirmed today is part of an effort to cut costs and will mark a big change to its FX business, as Citigroup is one of the largest dealers in the forex market.
Citi’s global head of FX electronic platforms and distribution, Alaa Saeed, told the news outlet that the bank had inspected 53 vendors and had already severed connections with a dozen of them, while another “20-odd” were going to be cut in the future. “We are just giving our clients time to switch,” he said.
According to the report, Brian Mccappin, the bank’s global head of foreign exchange institutional sales, added that Citi would hold annual reviews of the platforms it uses. For new venues, they are most likely going to have to pitch to be considered for trading.
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Citi: platforms don’t provide value for money
As Finance Magnates reported, the review that commenced back in October will see the bank cut the number of third-party platforms it gives currency quotes to 15 from 45 by the first quarter of 2020.
In particular, the Wall Street bank expects the scale-back to save $5 million to $10 million in costs a year. This is because the review found that the bulk of the trading platforms did not provide value for money.
Multi-bank, multi-user platforms have revolutionized FX trading over the past decade. According to the Financial Times, at least two other major banks are reviewing their use of external systems.
The increased scrutiny on trading platforms is likely to be directed to smaller systems, which are already under pressure from low trading volatility. Larger platforms such as Reuters-owned FXall and Deutsche Börse’s 360T will likely keep their place as a top pick for banks.