Citi’s Global Transaction Services is working closely with pan-European clearing and settlement providers, payments processors as well as payments networks.

Infrastructures such as US central securities depository the Depository Trust & Clearing Corporation (DTCC), European payment processors VocaLINK and Equens as well as payments networks such as Eurogiro are increasingly harnessing the expertise of their bank clients to develop more innovative products and services to meet their clients’ needs.

In April this year, DTCC’s European subsidiary, EuroCCP, was selected to provide a clearance and settlement solution for Turquoise – the Markets in Financial Instruments Directive (MiFID)-inspired consortium of seven financial institutions formed to develop a new pan-European trading platform.

Settlement agent

Recognising the extensive pan-European securities network operated by Citi’s Global Transaction Services, DTCC opted for Citi to serve as EuroCCP’s settlement agent. With this combination, EuroCCP is able to provide all clearing, settlement and risk management services to Turquoise.

“As EuroCCP’s settlement agent, Citi offers extensive securities operations capabilities across the European markets and beyond,” says Richard R Macek, interim CEO at EuroCCP. “Citi’s settlement capabilities cover more than 80 markets globally, including all the European markets covered by Turquoise. Citi’s established relationships with the European central securities depositories will also ensure local settlement efficiency.”

The collaboration with Citi, says Mr Macek, is aimed at providing a competitive and low-cost clearing and settlement option for pan-European trading platforms such as Turquoise.

In working with leading global financial organisations such as Citi, EuroCCP is able to establish its presence in the European marketplace in a more timely and cost-efficient manner, adds Mr Macek. “By leveraging Citi’s capabilities in multi-currency settlement with our expertise in clearing and settlement of securities transactions, EuroCCP is able to deliver a comprehensive post-trade services platform that meets and anticipates the future needs of market participants across Europe.”

Establishing a presence in new markets was also a driver for the alliances between Citi and transaction specialist VocaLink. In July this year, Citi became one of the initial 10 banks to work with VocaLink to create a new pan-European euro clearing and settlement system (€CSM). The service provides banks and their clients with Single Euro Payments Area (Sepa) services and taps into the infrastructure of member banks.

Additional services

In addition to core transaction processing services, the VocaLink €CSM will also offer corporate access services, direct debit mandate management, payment exceptions management, anti-money laundering and US Office of Foreign Assets Control (OFAC) compliance as well as non-Sepa payment processing.

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“The VocaLink €CSM provides a platform to deliver credit transfers and direct debits across the Sepa. What differentiates it in the market is that it also provides the basis for a broad range of innovative payment services,” says Marion King, chief executive of VocaLink. “By collaborating with banks such as Citi, we can leverage their extensive network in different geographies and identify opportunities to extend our product offering.
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Citi’s branch in Frankfurt, Germany, has outsourced its back-office legacy and Sepa payments processing to Equens. Michael Steinbach, chairman of Equens’ board of directors, describes the arrangement as a “win-win”.

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