Monday, 15 April 2024

Citi to become first digital custodian on BondbloX Bond Exchange

5 min read

Citi Securities Services announced that it has become the first digital custodian participant of BondbloX Bond Exchange (BBX), one of the world’s first fractional bond exchanges using the latest in distributed ledger technology.

BBX was launched in 2020 to simplify bond investing by allowing investors to track and trade bonds electronically. The launch was seen as a significant leap forward in revolutionising bond trading, making it more accessible to a broader range of investors by fractionalising full-sized bonds and bringing many of the benefits of equities trading to the bond market, in terms of improved access to the exchange trading of bonds and now the provision of settlement and custodial services in the BBX market.

The partnership with Citi allows Citi’s clients that meet certain criteria, to become BBX participants and begin trading bonds (both fractionalised and full-sized) almost immediately, with Citi providing seamless settlement and custody services at the back end.

Citi was initially chosen by BondbloX in 2021 to act as custodian for the underlying bonds issued and traded on its exchange as fractionalised assets (called “BondbloX”). The recent extended relationship unlocks additional opportunities and benefits for Citi’s clients as well as other BBX participants. In addition to benefiting from the services of a digital custodian, participants gain wider access to the global bond market enabling greater diversification of their investment portfolios, and immediate, atomic settlement at the point of trade execution.

Rahul Banerjee, CEO and co-founder of BondbloX, said: “The decision to partner with Citi was an easy one, given their reputation as a leading securities services provider and our history of collaboration.”

“This partnership will enable Citi’s clients and others to enjoy the full benefits of bond trading, coupled with Citi’s securities services support, almost immediately. Digital custody is the next big step in the transformation of the bond market, making bond markets, more transparent, electronic and accessible to all. Now, bonds are more easily accessible to everyone.”

Matthew Bax, global head of custody for Citi Securities Services, said: “Today’s announcement demonstrates our commitment to investing in the future of digital financial market infrastructures (FMI) by building products and services to support the current and future needs of our clients.”

“We are committed to partnering with BondbloX on their journey to transform and simplify bond trading and investing.”

Nadine Teychenne, head of digital assets for Citi Securities Services, said: “This proprietary digital custody technology is scalable and will allow us to provide settlement and custody services for clients investing in assets issued on permissioned blockchain networks and digital FMI. It enables Citi to connect to newly permissioned networks as they emerge and provide a fully consolidated custody service through a single operating model.”

“To develop this service, we leveraged our expertise in exchange-traded settlement and custody services which we provide today in around 70 FMI globally.”

With approximately $27.8 trillion in assets under custody, administration and trust worldwide, and a leading proprietary network spanning more than 60 markets, Citi Securities Services provides cross-border support for clients with extensive on-the-ground local market expertise, innovative post-trade technologies, customised data solutions, and a wide range of securities services solutions that can be tailored to meet clients’ needs.

Citi continues to develop digital asset solutions, in line with its goals and risk appetite, using a unified set of shared technology capabilities and a common strategic approach. These innovative solutions enhance Citi’s products and services including digital money, trade, securities, custody, asset servicing and collateral mobility.

Re-disseminated by The Asian Banker

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