11.08.2013

Citi Launches Penny Price Improvement in Mexico

11.08.2013
Terry Flanagan

Citi has launched Rð (Retail Price Improvement), a next generation order facilitation mechanism platform which will provide full penny price improvement to retail investors in Mexico.

For the first time in Latin America, institutional clients are able to interact with retail flow through Rð, enabling significant price improvements for both retail and institutional investors. By interacting with retail flow and other client orders, institutional clients have the opportunity to improve pricing on their execution between bid and offer.

“This is the first time that any broker has launched such a platform in Latin America,” said Mani Singh, head of international execution sales at Citi. “It speaks to the innovation of the Mexican exchange as well as our ability to create an order trading mechanism that allows retail and institutional client order flow to directly interact.”

“Retail is a much bigger proportion of the tape in emerging markets, and institutional clients want to interact with retail order flow,” he said. “This platform provides the opportunity to create a beneficial relationship, by which institutions get the opportunity to interact with 25% of tape in Mexico.”

With the introduction of Rð, local and foreign investor clients will benefit from equities trading platforms provided by Banamex-Accival, a wholly owned subsidiary of Citi.

“Banamex represents a big chunk of retail flow in Mexico, so aside from being the biggest broker in Mexico, Citi also owns a third of retail order flow,” said Young Kang, global head of algorithmic trading at Citi. “Five years ago, Mexico regulation was such that institutional order flow couldn’t interact with retail flow, so we had to segregate retail and institutional orders. Over the years, we’ve worked very closely with the exchange and the regulator to enhance Mexico’s market structure to encourage foreign participation and promote better execution.”

“Leveraging our world-class platform, we strongly believe that Rð, along with our breadth of product enhancements at the exchange level, will help improve liquidity and provide a unique opportunity for our clients,” said Alfredo Guillen, COO for the equity markets at the Mexico Exchange. “This will also encourage foreign institutional flow into Mexico and enhance our ability to reach both local and foreign investors.”

“High-frequency trading has from zero to 20% of trading in 2 years in Brazil and Mexico,” said Singh. “This platform allows our institutional clients to get better execution as they compete with a more diverse liquidity pool than they have historically.”

The launch of Rð follows Citi’s launch in Brazil of Total Touch, a block electronic execution platform.

Total Touch offers clients the ability to access Citi’s liquidity electronically, including U.S. stocks, ETFs and now equities in Brazil. The integration of trader experience with systematic quantitative technology improves accuracy, convenience, scale and economics of overall liquidity and risk capital.

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