[INTERVIEW] Citi emphasizes dedication to international FX administration

Flavio Figueiredo, Citi’s international head of overseas change based mostly in New York, poses throughout an interview with The Korea Instances at Citibank Korea headquarters in Seoul, Thursday. Korea Instances photograph by Shim Hyun-chul

Inclusion in WGBI to have constructive impacts on general monetary market

By Yoon Ja-young

Korea’s doable inclusion within the World Authorities Bond Index (WGBI), operated by the London-based FTSE Russell, is predicted to have varied constructive impacts on the general Korean monetary market past the native bond market, in accordance with Flavio Figueiredo, Citi’s international head of overseas change (FX) based mostly in New York.

“Since Korea was first added to the WGBI Watch Record in September 2022, Korea has accomplished a spread of capital market reforms with the purpose of WGBI inclusion, reminiscent of enhancing measures for Korea FX market construction and opening an account with Euroclear to enhance entry to the nation’s authorities bond market. As such, we’ve already been seeing improved market accessibility from overseas institutional buyers, which is a really encouraging change from the worldwide market views,” Figueiredo stated in an interview with The Korea Instances.

He’s visiting Korea from Wednesday to Friday to satisfy Korean purchasers and emphasize the dedication of the International Citi FX administration. Since becoming a member of Citi in Sao Paulo in 1989, Figueiredo, who acquired an MBA from London Enterprise College, has labored throughout quite a lot of areas on the agency, together with personal fairness, derivatives and FX.

“It’s anticipated to learn (the) Korean bond market since it’s anticipated to spark inflows of between $50 billion to $60 billion into the nation from passive buyers. Unfold over roughly 15 months, this can possible set off a fall in (Korean treasury bond) yields and, therefore, a fall within the authorities’s funding value. Heavy inflows are more likely to stabilize the Korean gained as effectively, however positive aspects will rely upon the quantity of hedged inflows and the offsetting outflows. Thus, we see the inclusion will turn into an essential level which can enhance the Korea monetary market to be extra built-in into the worldwide market with energetic flows.”

Figueiredo stated Citi is differentiating from different worldwide banks and native opponents, to be related to purchasers in Asia and notably in Korea.

“Citi’s mission is to function a trusted accomplice to our purchasers by responsibly offering monetary providers that allow progress and financial progress. We stay in an more and more advanced world the place enterprise and geopolitics are forging a wholly new dynamic, and shoppers now count on monetary providers to be a seamless a part of their digital lives.”

He stated Citi is uniquely positioned for this second.

“We now have greater than 200 years of expertise serving to our purchasers meet the world’s hardest challenges and embrace its biggest alternatives. By means of our huge international community and our on-the-ground experience, we will join the dots, anticipate change and perceive the wants of our purchasers and prospects in ways in which different banks merely can not. We now have an unmatched international footprint and understanding of native markets that our purchasers can leverage,” he stated.

FX enterprise mannequin

Outfitted with a worldwide community and a broad vary of FX merchandise, Citi is a significant participant within the FX market that gives liquidity to institutional purchasers in Korea. With all these capabilities, Citi focuses on purchasers’ wants and necessities and gives tailor-made options, in accordance with Figueiredo.

“For methods, Citi has danger administration options and advisory providers the place we will help purchasers hedge towards forex fluctuation and market volatility by offering insights and market evaluation. Citi additionally gives built-in options with money administration providers and digital FX options to adapt to quickly altering market dynamics.”

He pressured that Citi is investing repeatedly in tech stack to assist the digital priorities of purchasers.

“This yr, we’re additionally happy to increase our rollout of Velocity 3.0, our award-winning single seller FX working system that delivers a wealthy person expertise throughout the FX commerce lifecycle, into the native markets. This launch brings collectively our industry-leading platforms CitiFX Pulse, Citi Velocity Buying and selling, Citi Velocity Analysis and CitiFX Click on, below one consolidated entry level and person expertise,” he stated, stressing that Velocity 3.0 will greatest serve purchasers who’re more and more trying to optimize how and the place they supply liquidity from.

Flavio Figueiredo, Citi's global head of foreign exchange based in New York, poses during an interview with The Korea Times at Citibank Korea headquarters in Seoul, Thursday. Korea Times photo by Shim Hyun-chul

Corporates adjusting enterprise fashions

He identified that Asian companies are adjusting their enterprise fashions for a way more advanced, fast-paced, digital international financial system.

“Citi is concentrated on being the accomplice of selection for digital commerce and serving to our purchasers navigate evolving developments by our funds, liquidity and money administration providers. We now have the flexibility to attach and do enterprise in 95 markets utilizing native banking licenses and our on-the-ground experience. Citi is on the forefront of offering superior digital platforms and instruments that allow real-time buying and selling, automated transactions and information analytics, facilitating extra environment friendly operations for Asian corporates.”

He stated Asian companies are more and more digital, with a lot of them main the expertise improvement narrative globally.

“Resultantly, the use and adoption of FX expertise is commonplace for corporates. Treasury professionals acknowledge the worth that expertise brings to treasury administration,” he stated.

Embedded finance can also be one other space that’s driving the adoption of FX expertise, in accordance with Figueiredo.

“For instance, on-line gross sales distribution channels (e-commerce gross sales) are more and more implementing FX pricing options and multi-currency pricing to drive gross sales and elevate front-end person experiences. Citi (is) happy to accomplice (with) a number of the largest e-commerce firms globally within the design and deployment of those options, leveraging our strong FX API and danger administration capabilities,” he stated, including that Citi has gained a number of awards for its {industry} management in FX expertise.

Citi spotlighted amid RFI registration

When the Korean authorities launched the registered overseas establishment (RFI) certification to permit overseas banks to conduct FX buying and selling in Korea, Citi performed an energetic position in coordinating the coverage with the Korean authorities, in addition to offshore institutional buyers.

“We now have performed a key position as one in every of (the) only a few main banks (that) suggested the federal government to design the FX coverage change to be in keeping with international requirements. We all the time attempt to preserve a powerful relationship with the finance ministry (by) taking part in key conferences the place the officers search recommendation in areas the place Citi can supply international insights. In depth networks with international purchasers are one other pillar of power of Citi,” he stated.

He stated Citi has been receiving many inquiries from key offshore purchasers on coverage adjustments, not restricted to the FX market however prolonged to the bond market which can also be reformed in a approach that overseas buyers can commerce Korean treasury bonds with out main hurdles.

“With the Euroclear-(Korea Securities Depository) hyperlink launched, overseas buyers do not need to open Korean gained accounts in onshore banks, which can result in extra calls for (for) native bonds. The purchasers appear to be very eager on extra actively buying and selling Korean gained FX and bonds going ahead because of the coverage change. Onboarding, account set-up and different operational hurdles can be dealt with in an expert method by Citi. We consider all these coverage adjustments within the FX and bond market will finally make the Korean monetary market greater,” he stated.

FX market enchancment

Figueiredo stated the advance measures for the Korea FX market will convey main adjustments within the medium to long run.

“The Korean gained has lengthy been a non-deliverable forex within the offshore market, even after the federal government determined to maneuver on to a free-floating FX coverage again in 1997,” he stated. “Market transaction volumes have elevated meaningfully sufficient to alter the entire image of the FX market in a approach that offshore individuals can use deliverable forex. We consider main adjustments are anticipated to occur because of the market reform.”

He stated offshore institutional buyers and licensed offshore banks at the moment are capable of freely commerce the deliverable Korean gained, and therefore, they will entry onshore market liquidity, which is much extra liquid by way of transaction volumes in contrast with the non-deliverable ahead market.

“Additionally, market individuals at the moment are capable of commerce deliverable Korean gained even at evening time until 2 a.m. native time, which can make it simpler for European buyers to transform forex to put money into Korean property,” he stated. “We count on the Korean authorities to finally prolong the market buying and selling hours to be 24 hours in order that the market can cowl all segments of buyers. And we consider that can result in extra confidence and credibility in Korean monetary markets from international institutional buyers.”