Transition management (TM) has been through a turbulent period, with many providers exiting the market and others entering, and few can now genuinely claim to have a comprehensive offering both geographically and across asset classes. Citi has emerged from the period as an even stronger proposition. 

In 2015 the Citi TM team continued to grow and executed a record number of unique transition mandates, while hiring additional project managers to the global team. The number of transactions managed by the team – involving a total trading value greater than $1bn – increased by 20% year-on-year. 

The majority of these transition events were successfully completed in late Q4 in spite of challenging market conditions. The projects were a mix of equity and fixed income transitions across global markets and often included both derivative hedging and FX transactions. 

Citi TM saw a significant rise in the number of fixed income transitions while at the same time witnessing a continued fall in secondary liquidity across global credit markets. 

It helped a number of clients transition large fixed income portfolios through its principal transition offering, which has several advantages over the traditional agency approach, according to William Cobbett, head of transition management, Americas, at Citi. 

“The principal strategy was seen by clients as the optimal way to source the necessary outsized liquidity given the challenging conditions in global credit markets. This approach allowed clients to complete the required transition projects discretely with certainty of execution in terms of both timing and cost and therefore protecting assets.” 

The Citi TM team is situated within the Strategic Risk Solutions division. “We are separated by robust controls from the trading areas of Citi Global Markets,” says Cobbett, noting that the team is continuously monitored internally by legal and compliance teams to ensure client information remains protected and confidential. 

“This configuration allows clients to share their challenges freely with Citi TM, which helps us formulate more relevant solutions.” 

All project management, trading and settlement is controlled by Citi. “As a result there is typically very limited requirement for any external brokers or third parties to know about the event. All information is kept locked away until the point of execution.” 

Citi TM employs a “double-do method” to ensure accuracy of every step. “Every critical step is calculated twice independently via different individuals using distinct valuation methods and systems – the results values are then reconciled and matched prior to execution,” Cobbett explains. 

Citi’s scale allows it to offer global round-the-clock coverage, with dedicated teams in London, New York and Sydney. “The combination of three regional Citi TM offices provides our clients with full 24-hour global coverage for their transition projects. 

All offices benefit from using the same systems and project management approach and every regional team has multi-asset class capabilities and can manage transitions across all regions and asset classes.” 

“The global resourcing is a clear commitment by Citi to the transition management business and a differentiating factor as more TM providers scale back their coverage and operations,” says Cobbett. “As a number of our competitors have retrenched or completely closed their operations, Citi has invested, developed, and innovated to grow our brand, franchise and market share.” 

Cobbett says Citi TM aims to partner with the largest and most sophisticated clients, rather than perform the most transitions, so it can devote more resources to fewer events. 

In five years Citi TM has expanded from specialising in equity transitions, with offices in New York and Sydney, to its current global coverage. 

Citi is agnostic between execution approaches and provides both agency, principal and hybrid strategies across all asset classes and geographical markets, says Cobbett, and its transition strategies and trading plans seek to minimise implicit and explicit costs. Citi has extensive execution capability with trading desks in over 80 countries.