Citi Survey Shows Challenges Ahead from Accelerated Settlements

Rhea-AI Summary

Citi's whitepaper highlights that accelerated settlement is a major focus for market participants, with 77% expecting a significant impact on their business. Cash, funding, and liquidity management are identified as the main obstacles to achieving a shortened settlement cycle. Additionally, 80% of market participants anticipate a notable impact on their securities lending and borrowing business. The whitepaper also reveals growing interest in Distributed Ledger Technology (DLT) and digital asset initiatives, with 74% of respondents engaging in these initiatives. Furthermore, there is a belief that digital money, such as CBDCs and stable coins, is maturing quickly and seen as a viable means to support securities settlement by 87% of respondents. Overall, the whitepaper emphasizes the need for innovation, automation, and efficiency in global operating models.

Positive

• 77% of market participants expect accelerated settlement to have a major impact on their business
• 80% of market participants expect a notable impact on their securities lending and borrowing business
• Growing interest in DLT and digital asset initiatives
• 87% see digital money as a viable means to support securities settlement

Negative

• Cash, funding, and liquidity management are identified as the main obstacles to achieving a shortened settlement cycle

• 77% of the market participants surveyed expect accelerated settlements to have a major impact on their business
• 80% of market participants expect a notable impact on their securities lending and borrowing business
• Cash, funding and liquidity management remain greatest obstacle to achieving a shortened settlement cycle

LONDON & NEW YORK & HONG KONG--(BUSINESS WIRE)-- Citi today launched the third edition of its “Securities Services Evolution” whitepaper series, which shows the securities ecosystem faces challenging times ahead. The whitepaper finds that accelerated settlement is the single largest area of focus across all financial market infrastructures (FMIs) and market participants globally, with 77% of respondents expecting a major impact on their business.

“Our research shows that the rapidly accelerating move to T+1 in major markets poses significant challenges to industry participants, leaving an urgent need to drive innovation, automation and efficiencies in global operating models,” said Okan Pekin, Global Head of Securities Services at Citi.

Citi’s whitepaper includes quantitative and qualitative data gathered from 12 FMIs and industry participants (fintech, taskforces, banks) and almost 500 market participants from banks, broker-dealers, asset managers, custodians and institutional investors around the world. Collectively, these insights continue to provide valuable insights into developments across the global securities market ecosystem.

While the impact of acceleration remains the primary focus, a consensus is also emerging as to how best to prepare for it. Participants are focusing on clients and counterparties in the first instance; followed by in-house platforms and processes; and evaluating staffing and location strategies. For example, 69% of those surveyed are focused on automating and standardizing client communications while 64% are looking to upgrade /replace technology platforms.

Other notable findings from this year’s whitepaper include:

• For the last 3 years, cash, funding and liquidity management have been cited as the greatest obstacle to achieving a shortened settlement cycle
• 80% of market participants expect a notable impact on their securities lending and borrowing business - one of the single most impacted area by the move to T+1
• 74% of our respondents engaging in Distributed Ledger Technology (DLT) and digital asset initiatives (increased from 47% last year) in a clear sign that DLT momentum continues to grow
• 38% of market participants are today live with digital asset offerings vs 22% for DLT
• Growing belief across the industry that digital money (CBDCs, bank and non-bank issued stable coins) is maturing quickly – an overwhelming 87% see them as a viable means to support securities settlement (vs 72% last year)

“As market infrastructures continue to evolve, it’s increasingly important for industry participants to work in partnership to strengthen the stability of the overall ecosystem,” said Matthew Bax, Global Head of Custody for Securities Services at Citi. “Supporting innovation while maximizing global consistency of the client experience remains core to our Securities Services offering.”

A copy of Securities Services Evolution 2003 is available here: http://citi.us/3Oy8aOv

About Citi Securities Services:

With approximately USD$27.1 trillion¹ of assets under custody, administration and trust worldwide, and a leading proprietary network spanning more than 60 markets, Citi Securities Services provides cross-border support for clients with extensive on-the ground local market expertise, innovative post-trade technologies, customized data solutions, and a wide range of securities services solutions that can be tailored to meet clients’ needs.

About Citi:

Citi is a preeminent banking partner for institutions with cross-border needs, a global leader in wealth management and a valued personal bank in its home market of the United States. Citi does business in nearly 160 countries and jurisdictions, providing corporations, governments, investors, institutions, and individuals with a broad range of financial products and services.

Additional information may be found at www.citigroup.com | Twitter: @Citi | LinkedIn: www.linkedin.com/company/citi | YouTube: www.youtube.com/citi | Facebook: www.facebook.com/citi

¹ As of 31 March 2023.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230822236076/en/

Media Contact

Richard Bicknell

richard.bicknell@citi.com

Source: Citi