Citi supports Cicada Technologies’ efforts to boost institutional e-trading in the Mexican government bond markets.
Citi’s Markets Strategic Investments (MSI) unit has made an undisclosed “minority investment” in Cicada Technologies, maker of an all-to-all electronic alternative trading system (ATS) for global institutional market participants trading in Mexican government bonds, officials say.
Citi will also act as a liquidity provider for the trading platform. Although based in Greenwich, Conn., Cicada has a presence in Mexico.
The Cicada ATS “enables the e-trading of 28 Mexican government bonds, including nominal fixed-rate notes (Mbonos) and inflation-linked securities (UDIBonos) that can settle in Indeval, Euroclear or Clearstream,” according to the announcement. “The company is also looking to enable the trading of Cetes (Mexican T-bills), TIIE (Mexican interest rate swaps), Mexican corporate bonds and other emerging markets government securities.”
Cicada wants to hasten the adoption of “e-trading via a Central Limit Order Book (CLOB) and Request for Quotes (RFQ) protocols. The platform also offers automation tools for buy-side and liquidity providers, efficient execution of trades, connectivity to post-trade services, and data analysis of live and historical bond prices,” officials add.
“Traders are embracing technology quickly, and currently 15 well-known institutions are active on the platform and 10 are in the process of joining. Since launching last year, the trading volume on the platform has grown 15 times,” says Ignacio Tovar, co-founder of Cicada, in a prepared statement.
The Cicada ATS helps institutional buy-side and sell-side firms transact “without the need of a pre-existing trading relationship. The ATS is registered with the SEC and the broker-dealer activities of Cicada Securities LLC (a subsidiary of Cicada Technologies Inc.) are regulated by FINRA,” officials say.
Citi joins existing investors Kaszek Ventures, Dila Capital, and BCP Securities, and will also act as a liquidity provider for the trading platform, officials say.
The Mexican fixed income market is about $500 billion “with an average daily trading volume of approximately $5 to $7 billion,” according to Citi officials who are quoting Banxico. “The market is lagging in electronification versus other asset classes. It’s estimated by Banxico that at least 85 percent of local bonds are traded by voice and OTC [over the counter] via traditional non-electronic brokers. To solve this, Cicada aims to enable technology adoption among market participants with the goal of migrating these volumes to e-trading.”
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