Citi, Bank of America to Develop Independent Data Platform

Need to Know

• Citigroup and rival Bank of America are teaming up to develop a new platform, focusing initially on simplifying the collateralized loan obligation (CLO) process for both dealers and buyers.
• The platform will also focus on trading, data, and analytics for structured credit and underlying collateral markets.
• Citi and Bank of America say they hope to launch the platform within a year.

Analysis

Bank of America and Citigroup are teaming up to develop a new digital platform that the two banks hope will simplify the complicated, often-inefficient collateralized loan obligation process.

In a press release issued April 12, the two banks say they are working together to build a new independent data and execution platform for fixed income markets aimed at trading, data, and analytics for structured credit and underlying collateral markets. The platform will focus initially on digitizing CLOs for both dealers and buyers and will attempt to streamline what is often an inefficient, costly process by combining third-party data and analytics in one place.

According to a report in Bloomberg, CLO traders currently spend as much as 60% of their time manually compiling bid lists, but the revenue they generate is not significantly connected to those efforts. Citigroup and Bank of America aim they can cut that time down by as much as 80%, increasing both efficiency and the attractiveness of CLOs overall.

“The aim is to create an independent, multi-dealer platform for the CLO and loan market,” David Trepanier, head of structured products, global credit at Bank of America, said in a statement. “Not only will the platform help to increase operational efficiencies and transparency, we believe this is going to change how the industry currently trades in these markets and eventually lead to greater liquidity and market participation.”

The new platform is being tested by both banks; Citi specifically is backing this effort through its Spread Products Investment Technologies group, which is part of the bank’s Citi Markets FinTech Investments program. The aim is for the platform to exist as a central hub for traders to view data for structured credit and other underlying collateral markets. Citi and Bank of America are planning to launch the platform within a year.

“With the acceleration of electronification in the fixed income market, this collaborative effort will help lead the change,” Brian Bejile, head of loan portfolio trading and e-trading for loans and CLOs at Citi, said. “The platform, which is currently in the testing phase and is expected to launch later this year will build out a more accessible, user-friendly marketplace for third-party data and analytics and will combine the trading and data consumption in these markets onto a single platform with seamless user experience.”

Both Bank of America and Citibank have rolled out a number of digital advancements in recent months, as both banks seek to streamline their online processes amid the ongoing COVID-19 pandemic. Citi, for its part, recently expanded digital onboarding to 37 countries, in order to accommodate the increased demand for online-only banking service, while Bank of America rolled out a data-sharing integration with Plaid, which will alert customers to third-party data-sharing via push notifications.