Published On: Thu, Nov 6th, 2014

Citi Prepared For Stock Connect, Completed Migration To Third-party Clearing

Dirk Jones, Citi Global Head of Securities and Fund Services

Dirk Jones, Citi Global Head of Securities and Fund Services

Citi on 6 November announced the launch of a comprehensive solution for all clients to be ready to participate in the Shanghai-Hong Kong Stock Connect program (“Stock Connect”). The pilot program provides Hong Kong and international investors with direct access to A-Shares listed on the Shanghai Stock Exchange by trading through a Hong Kong broker.

Citi Markets and Securities Services will be ready to deliver on Stock Connect for institutional investors from day one. Citi has invested in preparation of the launch of the program, working to deliver a platform that permits investors to trade A-shares as efficiently as they would any other market.

“One of the widely-reported limitations of the Stock Connect program has been the need to pre-deliver securities, which restricts the ease of investors to trade stocks. Citi has developed a solution to this challenge, so investors can focus on their trading decisions,” said Cindy Chen, Hong Kong Head of Securities Services, Citi.

Citi’s combined platform spans execution, brokerage, custody, and clearing, giving institutional investors a very powerful and efficient proposition. Citi Investment Research and Analysis has also expanded coverage of A-Shares to include more stocks trading under the program.

“By combining our trading and custodian capabilities, and with the migration to third-party clearing, we are well positioned to serve all types of investors wanting to access Stock Connect,” said Kevin Rideout, Asia Pacific Head of Wholesale Execution Services, Citi. “The solution will be available to all institutional and retail clients, and has been designed so that investors can react to market news immediately, reduce their counterparty risk, minimize information leakage, and access RMB liquidity through the use of a trusted, independent custodian.”

The migration of Citi’s institutional trading business onto third-party clearing is an important step in securing Citi’s capability to operate in a delivery versus payment (DVP)/receive versus payment (RVP) environment for settling Stock Connect A-share trades.

Clients including hedge funds, institutions, and private and retail banks have signed preliminary documentation in preparation of the launch of Stock Connect. Citi’s platform further spans execution services, Delta One and electronic trading. A full suite of Tier 1 execution and research services are critical factors in markets such as Shanghai, which have been dominated by flows from the retail segment and which are driven by market events.

Citi’s readiness for Stock Connect is further complemented by its designation by the Hong Kong Monetary Authority as Primary Liquidity Provider for the offshore RMB market in the city, as announced earlier this week.

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