Citi extends account operator services in Manila

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Citi Direct Custody and Clearing (DCC), the asset servicing and transaction arm of global bank Citi, launched its account-operator services for broker-dealers in the Philippines in hopes of attracting more foreign investors.

By using the service, clients can establish and maintain market visibility while minimizing their operational footprint by leveraging Citi’s post-trade processing infrastructure, local expertise and market connectivity.

The immediate focus of the service will be global institutional customers looking to invest in the country, said Jeffrey F. Williams, regional head of Citi DCC in Asia Pacific in an interview.

“We want to support clients efficiently to enable the potential flow [in] to the Philippines. Of course, we service Philippine domestic business, but for the account operator and the cash-settlement bank services that’s really geared and focused on the international customers,” Williams said.

Citi will act as a third party provider as broker-dealers outsource their back-office operations. They are offered the convenience of holding direct membership at the Philippines Depository and Trust Corporation and the Securities Clearing Corporation of the Philippines in their own name while Citi operates and manages the account for both on-exchange and off-exchange transactions on their behalf.

“When we do account operator, it’s like agency clearing. The broker has a membership to the market infrastructure for clearing the trades that they execute and through the account operator, we are managing and operating that membership for them. So it’s their membership but we’re operating it on their behalf,” said Theresa S. Reyes, Citi Securities country manager.

Through the service, the global financial services provider hopes to address the demand for a low-cost, proven infrastructure as well as lower the entry barrier for broker-dealers entering the Philippine market.

“It’s basically something they do on their own. What we envision to do is basically offer this to new entrants in the market. When we were talking to regulators about allowing this kind of service, it’s really to attract foreign intermediaries to come in and make it easier for them to set up shop in the Philippines,” Reyes added.

Account operator allows for a faster “time to operate” for broker-dealers who want to set-up their presence in the Philippine equities market by allowing the outsourcing of broker-dealer functions to a third party service provider.

The company has also discussed the prospect of offering third-party clearing, where participants can gain direct market access by allowing Citi to handle clearing and settlement functions.

Citi is the first in the country to offer such services and is already in discussion with potential customers in the local market.

“We will be fairly assertive. We look forward to working with the clients to grow the service offering,” Williams said when asked about their target.

DCC provides asset servicing and transaction functions and core servicing to intermediaries such as broker-dealers and banks as well as fund managers, insurance companies and other global investors through a proprietary network in over 63 markets worldwide.