Derivatives house of the year, Asia: Citi

When Paul Smith landed in Hong Kong in late 2023 to lead Citi’s markets business in Japan, Asia North & Australia, the bank was about to embark upon a big restructuring. Back then, corporates and financial institutions were covered by separate markets teams and siloed further by product. Citi’s planned to rebuild its Asia-Pacific coverage with multiproduct relationships at the centre.

Three years on and the changes are yielding impressive results. Driven by growth in derivatives and prime services, equity markets revenues were up by 45% globally in the second quarter of 2026 compared with the same period last year. Fixed income markets revenues climbed by 7%, with particularly strong growth seen in spread products and credit trading.

“We’ve grown with banks and asset managers across rates, FX and equity derivatives,” says Smith. “A lot of clients are moving to multiproduct relationships, and the new model is helping us capture more of the client wallet. This is one of the themes driving strong performance this year.”

The structural changes made to Citi’s markets business in Asia-Pacific, starting at the end of 2023, came in the wake of a broader corporate overhaul.

Under the revamp, the bank formally split its Apac markets business into two distinct regional clusters. Smith was to oversee Japan, Asia North & Australia (Jana), while Singapore-based Sue Lee was appointed to head markets for the Asia South cluster at the same time.

The new model combined sales for corporates and financial institutions into one team. Within this team Citi still has product specialists: salespeople covering flow products in equity derivatives or FX flow, for example, are expected to know their products deeply. But the bank now also has derivatives solutions salespeople covering all products. In addition, every country has a country sales head that understands the local market and has a multi-product perspective.

To support the changes, a host of strategic senior hires were made in Apac through 2024 from competitors like JP Morgan and Goldman Sachs.

“We hired senior people with multi-product experience to strengthen client relationships and cross-selling across countries and regions,” says Smith.

The revamped coverage then depended upon the type of client. For example, some macro hedge funds wanted macro product coverage rather than separate FX and rates coverage. For some private bank clients, meanwhile, Citi found that it made more sense to combine FX and equities. These types of demands also manifested more strongly in certain Apac markets.

“Some clients, notably in markets such India and China, valued ​​​multi-product coverage through ​​a single point of entry​,” says Cécile Gambardella, head of sales for markets for Japan, Asia North and Australia and Asia South. Citi adjusted their model to cater for that demand, Gambardella adds.

“We have been investing to grow our systematic offering and platform​​,” Gambardella adds.

In Asia South, the focus has been harnessing the new multiproduct focus to build its business with financial institutions in addition to maintain its leading corporate franchise.

“My strategy in Asia South over the last two years has really been to strengthen our financial institutions offering as well,” says Lee. “In many of these markets we had such a strong corporate FX franchise that there was less imperative to build out the financial institutions side. That’s changed.”

One example of clients Citi can now serve better under the bank’s new sales model is Australia’s superannuation funds. The Australian supers – having outgrown their domestic equities market – are now moving en masse into cross-asset and cross-border strategies.

This has become a big business for Citi over the past year. It is moving the dial when it comes to multiproduct relationships in the country as well.

According to Smith, roughly 35% of the bank’s top clients in Australia were multiproduct clients around five years ago. In 2026, the figure has reached 85%.

Ultimately, the structural changes Citi made have supported a more co-ordinated regional coverage that has translated directly into revenue. A client that is trading with Citi across multiple product lines tends to be much stickier than one coming for only sporadic single-asset class solutions. This has helped the bank to go from strength to strength across asset classes in the past year, including one that it has traditionally been not as strong in.

Innovation in EQD

Equity derivatives has been a standout asset class for Citi in 2026 in terms of both revenue and market share growth. There have been some standout trades during this time too.

In one example, Citi acted as a swap counterparty for CSOP Asset Management, helping the asset manager to hedge its risk on a Hong Kong listed single stock exchange traded fund linked to a South Korean chipmaker.

Following its launch in October 2025, the CSOP SK Hynix 2x leveraged ETF quickly became one of the most popular investment products in Hong Kong. Fuelled by the AI-driven rally, the product reached its peak close to $17 billion of assets under management in late June 2026.

“The asset manager hedged its gap risk because with a 2x leverage ETF, anything beyond a 50% sell-off in a single day will incur losses.”

Citi was instrumental in the end-to-end product design, including in product design, developing the risk management framework, and recycling the risk to global hedge funds.

“We have our internal risk limits, but we also work with counterparties to syndicate and hedge the risk,” says Mario Serafino, head of multi asset group structuring and equity derivatives sales head for Apac. “In cases like these, we work closely with our clients to recycle the risk.” 

Another new product rolled out in the past year is the Beta Adjusted Fixed Coupon Note, in which the bank overlayed a traditional FCN payout with a gold holding. These were sold to private bank clients who were using gold to hedge against inflation but looking to receive income.

Like a regular FCN, the client sells a put on an underlying stock – a US tech name like Nvidia, for example – and gets a coupon if the stock stays above the knock-in or takes delivery of the stock if it falls below. But with the Beta FCN, the coupon and redemption amounts are adjusted according to gold’s performance. The client earns a yield from selling a put option on a tech stock, but the gold they already own determines how much they receive.

“Traditional fixed coupon autocallables are a well-established flow product, but there is still room to innovate on the payoff,” Serafino says. “Private banks were looking for solutions for clients with gold exposure, and we worked with our quant team to develop, model and price a structure with a yield-enhancement element.”

Staying ahead

The same capacity for innovation that has helped Citi climb up the rankings in equity derivatives is also why it continues to be a leader in fixed income and currencies. In the past year, the FIC business has been evolving in several distinct ways.

First, in the FX franchise it is developing more solutions-oriented relationships with corporates in the region who have traditionally been flow clients. Some of the bank’s larger corporate clients are becoming more sophisticated in the strategies they deploy to hedge their FX risks, and Citi has offered tailored solutions to meet these needs.

“We have been reorienting many of our corporate clients who relied on us for their FX flow into much more solution-oriented, customised hedging mindsets,” says Lee. “The fast-changing macro backdrop required clients to explore more structured solutions that led to improved outcomes.”

Secondly, the move from separate corporate and FI sales groups towards a product-agnostic setup is also helping the bank to capture more multiproduct business, from clients like the Australian super funds to life insurers in Taiwan and South Korea.

Third, is the depth of Citi’s local markets franchise. In Japan, sales of yen products have overtaken non-yen sales for the first time in the past year, prompting the bank to add to its domestic-product sales capacity. In Korea, it has captured a large share of the rebalancing flow from passive trackers after Korean Treasury Bonds joined the FTSE World Government Bond Index (WGBI). In China and Hong Kong, the bank is continuing to pioneer the internationalisation of renminbi derivatives and collateral through schemes such as Swap Connect and Repo Connect.

“Our number-one position in fixed income, currencies and commodities is a strength that we work very, very hard to defend,” says Lee.