Citi has made a strategic minority investment in Greenwich-based fintech, Cicada Technologies (CT), to facilitate institutional e-trading of Mexican government bonds.
Citi’s Markets Strategic Investments unit handled the investment, with Citi set to act as a liquidity provider for the trading platform. Citi joins existing investors Kaszek Ventures, Dila Capital and BCP Securities.
With additional presence in Mexico, Cicada has built an all-to-all electronic alternative trading system (ATS) allowing institutional buy- and sell-side participants to trade Mexican government fixed income securities without the need of a pre-existing trading relationship.
The ATS is registered with the SEC and the broker-dealer activities of Cicada Securities – a subsidiary of CT – are regulated by FINRA.
Cicada enables the e-trading of 28 Mexican government bonds, including: nominal fixed-rate notes (Mbonos) and inflation-linked securities (UDIBonos) which can be settled at Indeval, Euroclear or Clearstream.
Going forward, the company plans to enable the trading of Cetes (Mexican T-bills), TIIE (Mexican interest rate swaps), Mexican corporate bonds and other emerging markets government securities.
With an estimated 85% of local bonds traded by voice and OTC via traditional non-electronic brokers, Cicada aims to enable technology adoption among market participants to migrate these volumes to e-trading.
“As a leading liquidity provider in the Mexican government bond market, our participation in Cicada’s platform reflects our ambition to be at the forefront of electronic trading,” said Jose Luis Yepez, head of local markets rates trading at Citi.
Cicada plans to speed the adoption of e-trading via a central limit order book (CLOB) and request for quotes (RFQ) protocols.
The platform also provides automation tools for buy-side and liquidity providers, execution of trades, connectivity to post-trade services and data analysis of live and historical bond prices.
“Traders are embracing technology quickly, and currently 15 well-known institutions are active on the platform and 10 are in the process of joining,” said Ignacio Tovar, co-founder of Cicada.