Citi has quietly launched Citi Match, an anonymous crossing network that brings together the order flow of Automated Trading Desk and Citi. Tim Reilly, Managing Director and Head of Electronic Sales, says, "This is a game changer. One of the biggest challenges for any of the bulge bracket firms is to create a single point of access to their consolidated liquidity. There is a short list of firms that can offer one stop shopping for their non displayed liquidity." He explains that although most of the broker-dealers have matching networks, they don’t have the critical mass that he expects Citi Match to have, nor do they pull together all liquidity types. "We have the three legs of the stool, which is unique," noting that Citi Match pulls together institutional, broker-dealer and retail order flow. He says, "This is very different from simply pulling flow together from an algo, cash and program trading desk and calling it a crossing engine."

Reilly explains that this has all been possible as a result of Citi’s acquisition of ATD in October of 2007. ATD had a platform called Institutional Match or I-Match. The firm had a healthy market making business and clients included accounts from retail broker-dealers, some bulge bracket firms, and Alternative Trading Systems (ATSs). ATD was also developing an institutional business close to the time it was acquired with Citi. "Prior to the Citi acquisition ATD executed over 6% of NMS market share, which is significant," Reilly notes. "Post deal,the combined Citi and ATD platform is executing approximately 13% of NMS volume." At the time of acquisition, Citi had been developing its own matching network, but decided to leverage ATD’s platform. They have made some enhancements to the system for institutional clients, such as creating parameters for soft dollar and commission sharing arrangements.

How it works:
Citi’s cash traders, sales traders and program sales traders can place resting orders in the crossing network. A Citi algorithm or a direct order into Citi Match interacts directly with incoming order flow from all the liquidity providers mentioned in a “closed, blind crossing network.” Other broker-sponsored ATSs do have linkages but they cannot place resting orders, notes Reilly.

Running the platform is Steve Swanson, who retains his title as ceo of ATD, and is managing director and head of global electronic market making, for Citi. Reilly runs the sales aspect of the network.

The network was quietly launched six weeks ago with thirty clients and Reilly expects that number to expand rapidly. He notes, “Just this week we’re beginning to talk to other clients in a robust manner.”

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