CitiFX Pro to launch in Singapore

It follows the launch of CitiFX Pro in the UK this month, which is aimed at the same client group, adding to a presence in the US, Hong Kong, Switzerland and Israel (FX Week, September 14, 2009). “We will launch our product in Singapore shortly and plan to launch in a number of new regions, including certain countries in the Middle East, over the course of the next year," added Wilson, declining to comment further.

Wilson said growth on the platform has been exponential over the past year, with overall monthly volumes on the CitiFX Pro platform increasing more than 10 times over this time last year.

He explained the growth of margin FX trading reflects price quality, but said a key driver is the speed with which a client can open a margin FX trading account. “There is no credit approval process because the client's trading activity is fully cash-collateralised, and we can have a corporate account up and running in as little as 48 hours.”

This differs from the single- and multi-bank systems, where a hedge fund would need a prime brokerage relationship and secure credit relationships with its liquidity provider, which can take weeks or months. “The credit requirements for some of the more traditional electronic FX trading channels might not be available to all client types, particularly smaller institutions and individuals," he added.

Wilson said the bulk of growth on CitiFX Pro has come from the US, in particular the mid-market institutional segment, such as small to medium-sized hedge funds, proprietary shops and commodity trading advisers (CTAs). Wilson pointed in particular to a surge in volumes by CTAs and money managers that use a power-of-attorney structure to act on behalf of a book of clients.

"Before CitiFX Pro, we weren't well equipped from a functional perspective to service money managers using a power-of-attorney structure to trade on behalf of their managed clients, who we face directly on CitiFX Pro,” said Wilson. “Managed clients appreciate the security of having their cash margin collateral placed with a bank, and money managers themselves have been satisfied with the quality of our platform and service levels."

Wilson said primary liquidity on CitiFX Pro is sourced directly from Citi, in addition to other single bank providers. CitiFX Pro uses margining technology from Saxo Bank, and offers its pricing and liquidity through Meta Trader 4 (FX Week, October 5, 2009).

He said: "We offer a number of liquid, tradable emerging market currencies on our platform, but do not offer non-deliverable forward currencies. If feasible from a technology standpoint, we will consider offering them on our margin platform in the future." He admitted that, last year, CitiFX Pro saw demand from traders hoping to take exposure to the Brazilian real, which the platform does not offer.

Critics have said the minimum account requirement for margin FX trading at banks is expensive – $10,000 at Citi. Wilson argued this serves as a filter for less-desirable clients. "We considered increasing our current minimum account size, but do not plan to make any changes to it for the time being. We have stringent financial and experience criteria for onboarding individual and joint retail accounts," he said.

"This ensures we accept suitable clients. We have found our account minimum – which is higher than competitors – fits in well with these requirements."

CitiFX Pro offers Federal Deposit Insurance Corporation insurance, a government guarantee against losses in the event of bank default, but this is only available for US dollar-denominated accounts. Wilson said approximately 80–85% of its clients fund their accounts in US dollars and suggested that, within the UK, clients can access the Financial Services Compensation Scheme.

Wilson welcomed Japan's trust account structure for margin trading but emphasised the onus is on the customer to trade with a reliable forex provider (FX Week, July 16). He said: "Counterparty quality is an important factor to consider when evaluating a margin FX provider."

Wilson said the bank has no plans to enter into any new partnerships.