Paul Marks, Global Head of Electronic Trading at Citi

paul marks  2HoT talks to Paul Marks, Global Head of Electronic Trading and Electronic Trading Services for Futures, Clearing and Collateral at Citi.

HoT: You recently announced the launch of futures on Citi’s new ‘Citi Velocity’ platform. That’s an interesting innovation.

PM: Yes it is. ‘Citi Velocity’ is the bank’s single-dealer platform, which covers Credit, Rates and FX.  Based on client demand, we’ve listed futures products side-by-side with the bank’s liquidity for those other underlying asset classes. While some firms have moved towards purely offering services on multi-broker platforms, we still see high client demand for a single-dealer platform, alongside a wide variety of electronic distribution channels such as FIX, and a wholesale offering .  Our philosophy is to offer a leading futures product in every electronic distribution channel.

HoT:  Tell me a little bit more about Citi’s trading philosophy and strategies for the ETP products.

PM: In an era of globalization, one of Citi’s competitive advantage over our peers is a global network that serves institutional clients in 101 countries and that’s something that is really powerful to our clients because we can offer consistent services across jurisdictions and asset classes.

One of our key focuses is to offer a leading Futures execution product in every channel.  This includes supporting multi-broker platforms which embed our algorithms and synthetic order types.  We’re also seeing increased demand from second-tier banks for our CFOX (Citi Futures Options Execution) wholesale platform. Many firms no longer wish to run their own in-house electronic execution services due to the increased cost of compliance. In effect regulation is driving them away from leveraging their own memberships and technology and they are now looking for outsourcing providers to run their platform.  We have a great middle-ware product which can manage allocations.For example a broker who is executing for their client and giving that trade straight up to another clearer, we can manage all of that electronically in an STP fashion.  That keeps the costs down, and ensures efficiency and we have a very successful track record of delivering these sorts of scale solutions to the marketplace.

HoT: How much involvement do you have in getting involved in choosing the trading platforms and other technologies for the firm?

PM:  We are an applied technology business:  technology is what gives us leverage and scale, so it’s instrumental to everything that we do. As a result we work very closely with our partners in technology ate heavily involved in the direction of decisions that are made in this space.  Citi has a principal investments team for emerging strategic technologies and “innovation labs” to harness emerging technologies, and bring them into the financial services environment for us to tap in to.  We are also very connected to vendors on the street, in terms of developing their products across the execution and risk space.

HoT: What was your experience of the 2008 crash, and did that experience change your outlook in any way?

PM:  I think the most pertinent point to consider, with regards to the crash, is what the outcome in terms of the regulatory outlook was.  Two key changes came of that.  The first was increased capitalisation, the de-leveraging, which has forced people to re-assess the return on investments of their various businesses. Efficiency became absolutely key, specifically the efficient use of capital and the use of technology to drive the economics of the business.  The second was the increased cost of compliance and subsequently the real need to reduce the total cost of ownership.  To do that, you need to have a good understanding of what that total cost of ownership actually encompasses. That’s running the systems, the people, and the cost of managing change.  It’s about working out what is the right blend of commoditised vendor components, versus your own internally-developed intellectual property.  You then need to put that together and then deliver it all as a service to clients.  That’s why, when you look at my title, it covers ‘Electronic Trading Products and Services.’  We’ve brought the product and the service side, our ETS desks that provide the execution consultancy around our algos to our clients, together globally as one group.

HoT: Would you like to add something about the impact any regulations have had? 

PM:. We work in close collaboration with regulators and legislators in every region as we very much believe in being part of the solution, as opposed to just waiting and solving for the outcome.  We’ve been heavily involved in the Mifid II consultations, working on the microstructural issues.  We also work quite closely with trade associations to help educate clients around changes with regards to regulation, and what that would mean for changes to their electronic workflow. One of our key value propositions is educating clients on how they can then use services that we provide to  optimize the integration of regulatory requirements into their business models.

HoT: Could you summarise the career path that has brought you to your current position at Citi?

PM:  I started off in technology in 2001 at UBS.  I spent three years working in market connectivity connecting to the actual exchanges.  I covered cash equities as well as listed derivatives and I also spent some time on trade floor support, supporting the trading front end.  So I very much learned around exchange connectivity and electronic trading on a first principles basis in the early days of the evolution of electronic markets.  Subsequent to UBS, I spent eight years at J.P. Morgan.  When I left I was heading up electronic trading product for listed derivatives in Europe on the business side, and came to Citi four years ago to help build out their futures business.  We have had a pretty unique opportunity at Citi to make a strategic investment in technology so we really took a step back and looked at how the market has evolved and where regulation was headed.  We were very fortunate to have also had the investment in the people to come up with a clean sheet design and to develop the optimum global electronic execution platform that is our backbone.  That is the very basis upon which we can now offer a fantastic product in the various electronic distribution channels to our clients today.