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Cash Is King: Treasury Values Surge to $418B in Q1 According to Citco


The value of treasury transactions among alternatives and institutional funds increased by 25% to $418B in Q1 of this year from the previous quarter, according to the Citco group of companies (Citco), amid an on-going, near-unrecognizable interest rate environment and a surge in banking sector volatility.

The banking sector volatility seen in the first quarter – which resulted in the back-to-back collapses of Silicon Valley Bank and Signature Bank, as well as the takeover of Credit Suisse – created large cash movements and drove up the dollar value of funds. However, this flight did not entirely underpin this quarterly increase in transaction value: it is a continuation of last year’s trend of managers putting more cash to work as return-generating assets following soaring inflation and rapid rate hikes - as well as funding and transfers, the majority collateral-related resulting from increased margin calls.

According to Citco’s Q1 2023 Middle Office Solutions Report, the value of treasury transactions not only increased by 25% quarter-on-quarter, but the volume of securities-based margin movements also soared by 66% in Q1 - as managers looked to post securities rather than cash as collateral, leaving cash to work as an alpha-generating tool.

Cash margin is still relevant, but only increased by 10% in Q1 as securities took a larger portion, while we saw a slight increase of 14% in overall margin calls.

Ryan Fitzgerald, Head of Middle Office Solutions, Citco Fund Services (USA) Inc. said: “Given current high interest rates, it is clear that managers are now evaluating putting cash to work in higher interest rate products, while posting securities as collateral – another signifier that cash is now seen as an alpha-generating tool.

“For now, as always, the focus for managers’ Middle Office teams is how to reduce costs and increase operational efficiency. In addition, the materiality of margin costs have pushed Middle- and Back-Office concerns very much into the Front-Office mind-set. Therefore, demand for more treasury management shows no signs of abating. Managers are increasingly reviewing their operating systems and many are facing a choice - either invest in building the infrastructure to manage cash effectively and meet regulatory requirements, or outsource.”

Meanwhile, regulations continue to have an impact. New Central Securities Depositories Regulation (CSDR) rules in Europe have also led to a rise in EU managers seeking pre-settlement services; overall, Citco saw a 59% increase in the number of clients using Trade Matching services in 2022, and a further increase of 14% in Q1 2023 on the previous quarter.

The Middle Office Solutions Report contains data on overall trade volumes, values and collateral calls for Q1 2023.

Data on payments volumes and collateral moves are constituted by all dispatched payments including Letter of Acceptances. All data is drawn from clients using Citco’s proprietary systems, Æxeo® Collateral and Æxeo® Treasury. All transaction types are included from tax payments to loan funding, transaction costs, cash collateral and OTC settlements, among others. The underlying funds include all Hedge, Private Markets, Real Assets, Family Office and Institutional funds in our client base encompassing a significant proportion of Citco’s $1.8T in Assets Under Administration.


Notes to Editors

About the Citco group of companies (Citco)

The Citco group of companies (Citco) is a network of independent companies worldwide. These companies are leading providers of asset-servicing solutions to the global alternative investment industry. With over $1.8 trillion in assets under administration and operations spanning across 36 countries, Citco’s unique culture of innovation and client-driven solutions have provided Citco’s clients with a trusted partner for more than four decades. Having grown organically into one of the largest asset servicers in the industry, Citco’s Fund Services companies offer a full suite of middle office and back office services including, treasury and loan handling, daily NAV calculations and investor services, corporate and legal services, regulatory and risk reporting as well as tax and financial reporting services. Investing heavily in innovation and technology whilst further developing its current suite of client-friendly solutions, Citco will continue into the future as a flagbearer for the asset-servicing industry.

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Victoria Hayns / Bryn Woodward / Vivian Lai at Instinctif Partners
+44 (0) 20 7457 2045 / +44 (0) 207 457 2040

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