Citi sells forex brokerage arm

Citi

Citigroup Inc’s retail forex brokerage arm, CitiFXPro, is being sold in order to consolidate their currency trading operation, a source told Reuters.

The sale, originally reported by industry website financemagnates, is taking place during a time when banks have started to improve their volumes and returns over the past year, and are now thinking about reinvesting in currency trading.

CitiFXPro is the bank’s online forex trading service which offers traders and smaller industry professionals access to more than 130 currency pairs, the combination of the base currency and quote currency, all provided to them on the Citi system infrastructure.

In recent years, Citi has cut staffing and computerised much of its currency business indicating that the financial services corporation is keen to make changes to benefit the business.

The news of the sale comes after the collapse of a handful of businesses and big losses in the forex market following the Swiss franc’s surge in January.

Citi has also progressively decreased its dealings with retail banking in markets such as Japan, but industry surveys continue to rank it as the number one banking player in the forex market. This may be due to changes in regulations which enforce capital requirements, which has made it more expensive to run trading like foreign exchange that provide large leverage and conduits for hedge funds and other big institutions. However, many banks are now adapting to new regulations by changing to new business models.

An anonymous head of a London-based brokerage and a previous head of trading of a major European bank told Reuters that “you will see banks investing again in FX now. It has been one of the best performing segments over the past year and that has drawn attention.”

“Like most parts of the business the model does not quite work, but it is very close to giving banks the return on equity they need. So the way to do that is to invest while continuing to automate aggressively,” the anonymous brokerage head said.

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