Citi Shifts Working Hours, Enhances Platform Ahead of Settlement Cycle Change
Workers enter Citigroup headquarters in New York, US, on Thursday, Aug. 4, 2022. Citigroup Inc. is planning a 500-person hiring spree over the next three years for a new wealth division catering to junior employees at private equity offices, consultancies and accounting firms, betting those clients will someday join the ranks of the ultra wealthy.
(Bloomberg) — As Wall Street braces for the new era of faster settlement times across securities, Citigroup Inc.’s global custody business is leaving nothing to chance after taking measures to avoid failed trades ahead of the end-May deadline.
The firm has shifted the work hours of some of its staff in Kuala Lumpur to align with those in the US, Michele Pitts, head of North America custody product strategic initiatives at Citi Securities Services, said in an interview. It has also created a task force that will solely focus on the move to a one-day settlement cycle, a process also known as T+1.
“The intent here is to be hyper-focused,” Pitts said. “As an industry, we are going to be only as good as the weakest link.”
Citi joins dozens of other financial institutions preparing for the shift. The move — which has, so far, prompted some shops to buy dollars, extend night shift hours and redeploy staff — is expected to cost global investors more than $30 billion annually as it comes into effect on May 28, according to Bloomberg Intelligence. While the rationale behind T+1 is to lower the risk of defaults on transactions before they’re completed, it comes with big operational challenges for the overall industry.
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Citi is adjusting by moving a part of its staff in Kuala Lumpur to a Tuesday to Saturday schedule — instead of a typical Monday to Friday one — to better align with counterparts in the US, said Pitts.
Because it has service centers in several cities, including Warsaw, Dublin, Tampa in Florida, and Pune in India, coordination is a crucial part of the T+1 move, Pitts added. Moving the hours allowed it to have live support in multiple regions, she said.
The temporary unit that the firm created within its operational team in various service centers formed around four weeks before May 28 and will disband six weeks after, Pitts said. It will specifically focus on helping the firm speed up the settlement cycle to meet the new rules.
Also as part of its efforts to prepare for the T+1 process, Citi earlier this year enhanced its online global ETF portal, ACES, that fully automates the entire creation and redemption process to simplify order management and on-boarding ahead of the settlement shift. The enhancement comes after the firm moved to a technology stack that eliminated batch processing, allowing it to support T+1 across asset classes.
The firm’s ETF Services business covers 12 markets globally, with over $555 billion in assets under administration as of December 2023. The bank supports over 50 global exchange-traded fund issuers and close to 600 funds.
(Adds detail on ETF portal in eighth paragraph)
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