Responding to customer concerns following the loss of funds in the collapse of commodities broker MF Global, Citigroup said it is giving its customers Internet access to details about how their collateral is invested.
The system, which Citigroup said has been under development since March, began working over the weekend before news broke that U.S. futures broker PFGBest had collapsed after allegedly losing more than $200 million in customer money.
Coming on top of the MF Global failure, where as much as $1.6 billion of customer funds were estimated to have to gone missing, the PFGBest collapse has renewed doubts about the safety of customer funds that the industry classifies as "segregated."
PFGBest's regulated affiliate, Peregrine Financial Group, filed to liquidate under Chapter 7 of the U.S. bankruptcy code on Tuesday.
"Clients want transparency," said Christopher Perkins, Global Head of OTC Clearing at Citigroup. "They want confidence that segregation is working, particularly after MF Global and yesterday's events."
Customers using the system, called Citi Velocity, can see each day the value of the collateral that the company is holding and the portions in cash and securities, Perkins said.
"The whole goal here is to instill confidence and show clients we are doing the right thing," he said.
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