Best Bank Awards: Citi

With volatility in the G10 foreign exchange space at decade lows it is perhaps more important than ever for a bank in a dominant position in the FX marketplace to maintain the most efficient tools to help all client segments transact and access liquidity with as little friction as possible.

The strength of Citi’s foreign exchange franchise lies in the breadth of services and products it offers, says its global head of FX, Itay Tuchman.

“Citi provides clients with a full array of FX currencies, products and services. And so, by definition, we need to be very active in all parts of the FX ecosystem,” he says.

On the liquidity front this means providing market participants with the right tools to access principal and algorithmic solutions to manage their transactions as cost efficiently as possible.

Citi’s liquidity is certainly a differentiator, but as algorithms do have their place in the mix, the US bank invests heavily in both areas.

“We view the algo business as part of an important suite of tools,” says Tuchman. “A lot of clients want to interact with the FX marketplace, but we also want to continue investing in tools to enable clients to interact with Citi’s liquidity, which is a strategic advantage for us.”

“More clients recognise algos as playing an important part in a mix of means of execution, but even the most active algo users are increasingly recognising the importance of principal liquidity,” he points out.

And some of Citi’s clients who conduct the majority, if not all, of their FX transactions through algos are returning to the bank’s principal liquidity, and accessing it either through voice or electronic execution.

Focusing on just one particular segment or one particular product is too narrow. These things have to fit together

Itay Tuchman, Citi

How customers access liquidity naturally depends on client type, jurisdiction and strategy.

Citi offers a broad range of FX derivatives, as well as an extended structured product offering. These range from deal-contingent to yield-contingent transactions and episodic-type options, depending on the needs of corporates, institutional investors and hedge funds.

“I look at structured products as part of a multi-pillar strategy in the derivatives space,” says Tuchman. “Focusing on just one particular segment or one particular product is too narrow. These things have to fit together.”

Citi was voted best bank in eight categories at the 2019 FX Week Best Bank Awards in a tie for the most awards this year. The US dealer was also voted the second-best bank for FX overall. The eight accolades were for EUR/USD, USD/JPY and EUR/JPY, FX forwards, currency options, structured products, corporates, and FX research and strategy.

Recognised as the best bank provider of services in the two most widely traded pairs of EUR/USD and USD/JPY, where a daily average of $2.5 trillion exchanges hands, market participants pay attention to Citi’s views on the outlook for FX markets.

Despite low volatility in the overall FX market there remains outlier events that may affect this dynamic. From the UK’s Brexit debacle to the whirlwind of US politics, clients look to Citi for insight and thinking on the gamut of issues that can affect the markets, Tuchman points out.

Whether its views pan out to be right, clients appreciate the perspective and analysis that Citi brings forward in helping them to measure how attractive the markets might be for them, and to gauge the risk-versus-reward outlook, he says.

“Providing our thought leadership on macroeconomics and politics is definitely a value-add to our customers,” says Tuchman. “Clients want to engage around our thinking, and our ideas around FX and other asset classes.”

If good insight can be provided to clients, they will pay for it, he adds. As such, over the past year, Citi has invested a significant amount of time and energy into bringing in talent to its strategy and research teams across various geographies.

The full list of winners of the 2019 FX Week Best Banks Awards