Citigroup's new third party clearing service gives the bank's broker dealers direct access to the Australian Stock Exchange (ASX) from offshore locations. The service is targeted at those securities firms wanting to access the Australian market without establishing a local presence or infrastructure, as well as Australian brokers looking to achieve cost-savings by outsourcing their securities back-office operations to a third party clearer.
Mike Sleightholme, Asia Pacific Clearing Head of Citigroup Global Transaction Services, said third party clearing services are of great interest to securities firms at a time when cost management is an industry-wide priority.
"With 35 percent of all ASX trades by volume and value originating offshore, our new third party clearing service has the potential to deliver significant savings to offshore institutions as they no longer need a local broker to execute transactions on their behalf," Sleightholme said. "By leveraging our existing custody business to offer third party clearing services, Citigroup can generate economies of scale that also makes it a compelling proposition for all other ASX market participants to outsource their back office operations to us".
Sleightholme added that outsourcing of back office operations allows securities firms to manage costs and focus on their key competencies such as research, trading and investor servicing. "Outsourced clearing is standard practice in US and European markets and we believe Australia will also benefit from the efficiencies this model provides. Citigroup's offering will result in a more competitive market and enable brokers to find the service that best suits their needs".
The ASX introduced offshore market participant rules in March 2004 that allowed qualified foreign applicants to be trading participants without needing a physical presence in Australia. However, foreign trading participants are required to clear and settle through an approved domestic third party clearer, such as Citigroup.
Citigroup in Australia has the largest market share of international broker dealer clients in terms of transaction volumes. Citigroup is the only foreign custodian to offer a complete solution that combines traditional custody with third party clearing capabilities.
May Wu, Tel: 852 2868 8982
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Brian Steel, Tel: 1 212 816 2949
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Charlotte Ronan, Tel: 44 207 986 2809
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