Citi looks east in trading venture investments

By Daisy Ku

LONDON (Reuters) - Citigroup (C.N: Quote, Profile, Research), which has built up its interest in alternative equity markets to ensure a stake in the future, is in talks with Chi-X Global to seek opportunities in Asia, the next trading hot spot.

Citigroup, which has been expecting liquidity in share trading to fragment, has been quick in snapping up stakes in new ventures to steer market structure developments.

"Australia is somewhere where there is flexibility in what we can do. We are talking to Chi-X in that space," Richard Evans, global head of electronic execution at Citigroup, told the Reuters Global Exchange and Trading Summit 2008.

Citi already has a stake in Chi-X Europe, which is held by Chi-X Global, a firm formed by Nomura-owned agency brokerage Instinet in February to oversee operations in Europe, Canada and Asia.

Chi-X Global is applying for regulatory and legislative approvals to launch Chi-X Australia as the Australian Securities and Investments Commission introduces competition to the Australian Stock Exchange.

With new entrants crowding the U.S. and the European trading landscape, brokers are turning their attention to the growing markets in the East.

"You will see a little bit slowing down of our investments in the U.S. because we have a seat in the table of a number of ventures," Evans said. "In Asia, as some new ventures take place, they can potentially be more appealing to us then investing in another MTF (multilateral trading facility) in Europe."

Liquidnet, a block trading specialist, for example, opened for business in Hong Kong in November 2007 and in Australia in February this year. Agency broker ITG now has business in Australia, Hong Kong and Japan.  Continued...