Yi Hahn Chin, MD and regional head of e-FX solutions – corporates, EMEA at Citi, talks about the most recent regional rollout of the bank’s e-FX platform for corporates, and the broader challenges associated with deploying this technology in emerging markets.
Profit & Loss: Talk me through the roll out of Pulse in Nigeria – why there? What are the benefits that this brings to clients?
Yi Hahn Chin: The inclusion of Nigeria in the overall roll out plan is a reflection of Citi’s ambition to make CitiFX Pulse available to clients wherever operationally possible. Nigeria represents a critical economy presenting opportunities which our clients are keen to leverage while keeping a tight control over their FX exposure and complying with stringent local capital control requirements. The solution we developed enables us to streamline the local auctions process which conforms to local regulations.
P&L: What dictates target markets for you? Is it just the size of the trading volumes for a particular currency?
YHC: Client demand is the primary driver, which I guess you can say is highly correlated to trading volumes. There are a handful of countries that require a significant amount of effort to deal FX, which can also represent significant efficiency gains for clients beyond volumes.
P&L: What are some of the key challenges associated with deploying Pulse in emerging markets? For example, are they more legal and regulatory in nature or technological?
YHC: It is a priority for us to help our clients navigate and comply with the changing regulatory landscape. Citi’s FXLM business operates from more than 80 countries: this on-the-ground presence allows us to develop a unique local expertise for our clients. Against this background, CitiFX Pulse is a key differentiator to help corporates meet local legal and regulatory requirements. These can be complex to fulfill but ultimately can be an opportunity and value add to our client franchise. Once deployed, remaining compliant can be a challenge and requires constant connectivity between our local markets businesses and our global product development, legal, risk and compliance teams.
P&L: Are these challenges fairly common across different countries/regions or idiosyncratic to each?
YHC: These challenges can vary, but can fundamentally be categorised from a workflow perspective on whether the specific regulatory requirement is that of pre- or post-execution, FX or related to cross border movement of funds. That said, every jurisdiction is considered independently in view of a high degree of local nuances (e.g., the need to provide purpose of trade up front).
P&L: Do you see growing demand for pulse across emerging markets more broadly? Or is it focused more on specific countries/regions?
YHC: Demand has been growing in line with the desire for regional or global corporate treasuries to obtain a higher degree of control, efficiency and transparency around their FX activities – in the emerging markets particularly. There’s been a natural focus towards the more regulated regions like Latin America, Africa or Asia as the proposition Citi provide through Pulse is unique.
P&L: Looking ahead, what are the key areas of focus for you for the rest of the year?
YHC: As our clients become more technologically advanced with their Treasury systems, which fundamentally broadens the scope for FX-related connectivity, we are ensuring that Pulse grows in tandem in relevance by enhancing the ability to connect pulse with our clients.