The new service enables Citigroupâs broker dealer clients to trade securities listed on the Australian Stock Exchange (ASX) from offshore locations.
Clients are able to place their trades directly on the ASX via their own SEAT terminals or by using infrastructure provided by Citigroup, which also manages clearing and settlement of those transactions through GBSTâs Sharesâ¢ platform.
Citigroupâs third party clearing 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, 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.
"ith 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"he said.
"y 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 other ASX market participants to outsource their back office operations to us"
Mr 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.
GBST CEO and Managing Director, Stephen Lake, said he was delighted that Citigroup had selected GBST as its technology partner.
"he advanced design and automation of GBSTâs technology allows it to meet a diverse range of client needs within the Australian market, as well as those in other overseas markets," he said.
"utsourced clearing is standard practice in US and European markets and we believe Australia will also benefit from the efficiencies this model provides. Citigroupâs offering will result in a more competitive market and enable brokers to find the service that best suits their needs"
Mr Lake also said that GBST would continue to look for similar opportunities to introduce technology efficiencies into other markets and increase its market share in securities processing and third party and regional clearing in Australia, as well as in new geographic areas such as the Asia Pacific.
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.