Electronic brokerage Instinet and CitiFX, Citigroup's FX division, have entered an alliance to jointly develop and operate a new foreign exchange crossing service, The Instinet FX Cross.
The Instinet FX Cross is a currency-crossing product that will support the execution of large currency transactions anonymously at a transparent market price.
The CitiFX Benchmark will provide the exchange rates at which all trades by CitiFX will be executed. Instinet, through Instinet Global Holdings, acting as an agent for CitiFX, will manage all order taking and matching functions. All executions will be processed by CitiFX’s back office. Special booking and clearing systems have been developed to preserve client anonymity and no member of a traditional trading floor will learn of matched flows. Clients may elect to have unmatched residuals of orders returned to them or have them executed by CitiFX at the same Benchmark fixing.
Initially, the FX Cross will offer executions in 12 currencies and two crossing sessions per day.
Jean-Marc Bouhelier, chief operating officer, Instinet explains: "The Instinet FX Cross is a natural extension of Instinet’s analytical trading business. It represents another innovative use of 'crossing' as an execution tool in which customers can benefit from Instinet's core values of anonymity, price transparency, neutrality and execution quality."
Vikas Srivastava, global head of e-commerce, CitiFX, says: "The product meets customers’ needs for anonymity and price transparency and minimises market impact, a powerful combination that is not provided by any other FX execution platform."
The Instinet FX Cross is expected to be operational in the fourth quarter of 2002. It will first be available to North American clients with a European roll out planned to follow soon after.