00:00Traditionally wealthy investors have typically gotten access to these types of companies via allocations to alternatives. So to get us
00:07started. How is what you're offering different.
00:10Yeah. First of all it's Colin. Thank you so much for having me. And by the way greetings from Zurich.
00:15So I'm right here where the inaugural event has happened which is in partnership with six the digital Swiss centralized
00:23securities
00:24depository. So how does how's this difference. So in the past as you probably talked about. Investors have gotten access
00:31to private markets but generally when they've gotten that access you know that access you know it's been relatively
00:37liquid price transparency and price discovery has potentially been a bit of an issue. And so what we're trying to
00:44do here is used market leading depository receipts capability coupled with our market leading custodial presence and basically bring them
00:53together along with our markets distribution and our wealth capabilities and offer clients the ability to invest in pre IPO
01:01private shares on chain and allows them to get you know access to a private
01:07asset in a regulated structure. Would it and to Scarlett's question about this being typically available to wealthier clients via
01:16alternatives and secondaries that would
01:18be an you know a portion of a of a client's portfolio. Would clients then be able to trade this
01:24product or these assets or you trade on their
01:28behalf the same way that you trade any other stock.
01:32That's exactly right. And I think as I mentioned this would be an asset that would be quoted as part
01:37of the regular cap table for the client and it would
01:40basically look like for the investor side it would be part of their portfolio reporting and then be able to
01:46trade them through six as the
01:48holder as the securities depository. How do you know there's enough liquidity there to actually have this mark to market
01:54every day and as
01:55actively traded as something that is available to a wider group of people. If it's just available to the smaller
02:02group and it's on
02:03chain for cities clients then how is it actually priced accurately. Yeah. So great question. So I think we're the
02:10first to market with this
02:11same at this point of time and we've put this out there to really go on a voyage of discovery
02:16and actually give companies access to that
02:18capital and actually give investors access to these securities as well. So as we build out momentum on this as
02:24I said first to
02:25market we're expecting more and more companies to actually ask us. We've got a lot of incomings from our clients
02:31already and
02:32really allow them the access to those markets and hopefully build momentum on this product over time. So to Tim's
02:38point about liquidity right
02:39now this service is only available to foreign investors. What needs to happen before it becomes available to U.S.
02:45investors.
02:47Yeah. So I think it depends on the type of issue. I do expect us to really as we're thinking
02:52about the
02:53various companies and various disclosure rules we do expect it to take this to the U.S. market as well
02:57in the very near future. Would those only be available to so-called accredited investors?
03:03That would be available to both wealth and institutional investors. Okay. Okay. That makes sense. When does this move
03:09beyond tokenizing your own investments? Because as we saw in the Wall Street Journal piece,
03:15a tokenization, the transaction was with Kaleido, this tokenization and digital asset platform that is a
03:20Citi portfolio company. What do you need in terms of like buy-in from companies that are not Citi portfolio
03:26companies to make sure this works for them? Yeah. I think Citi portfolio company was just the first
03:32company that we spoke to because we were, as you can appreciate, we're an investor in this company.
03:37We are also the provider of the depository receipt structure. We are the custodian in this company.
03:43We also used our markets platform on the secondary side from a distribution standpoint. And then for
03:48our wealth clients as well, we gave this access to them. So as you can think about the entire Citi
03:53construct, we pretty much hit every business line across the way. So as I talked about earlier,
03:59my expectation is that we are going to get a lot more incomings from companies that are not Citi
04:05portfolio companies. And our ability to help them should absolutely be there. We should be helping
04:10them raise capital and effectively providing them through this regulated digital infrastructure,
04:16be providing them another access to capital as an entry point for the investor community.
04:21So Shamir, Robinhood tried tokenizing private shares last year, but issuers like SpaceX pushed back hard.
04:27Your model needs issuers to authorize Citi to offer their shares. So how do you convince a pre-IPO
04:33SpaceX or other unicorn to let you create that secondary liquidity when Elon Musk, the founders,
04:40spent a lot of time, a lot of energy trying to control their cap table?
04:45Yeah. So the way I would think about it is, first and foremost, as you've seen with Collido,
04:49we had full C-suite engagement with the Collido team. And we went at this with the full help
04:55and backing of the Collido team. So I think you're going to get different investors with
04:59different perspectives. But for the investors, for the companies that are looking for access to
05:05those investors, I think this is a great entry point from a digital standpoint and actually helps
05:10us build out and spec out the capabilities of this platform for the future as well. So I do expect
05:15different outcomes.
05:16Do you need any regulatory approval here in the US to make this happen? Like what's a timeline for
05:23when this happens in the US?
05:25I would expect there to be a six to 12 months timeline. It's about disclosed rules and how
05:29we make this thing happen.
05:30But no regulatory approval or anything? This is all on Citi's end, making it work here in the US?
05:36It's actually regulatory approval coupled with a company's need and coupled with the right
05:40relevant approvals for us to be able to market to US institutional investors as well,
05:44to your US point.
05:46What's the significance of this particular service to Citi's overall digital asset strategy?
05:52Yeah, so we've been very focused on the digital side, basically thinking about 24-7 across the
05:58board to say, as we think about payments, liquidity, tokenization of securities, and the underlying
06:04settlement of custodial securities, collateral posting as well. So we've been really focused on
06:09really moving that entire value chain on chain, so to speak, and making sure that we're not just
06:16upgrading our conventional rails, but also investing in blockchain-based rails and then connecting them
06:23as well. So banking, what I would call the pure digital universe, we've been on the road and in
06:30process of banking some of the coin companies as well. We're also connecting their infrastructure with
06:36our conventional infrastructure, allowing for on-off ramps to happen. Plus, obviously, we've been
06:41investing to do reserve management for those companies as well. So I would say this is part of
06:46the bigger digital asset story that we've laid out for the market, where we think there is considerable
06:52potential for Citi to continue to play a leading role like we've done in the past.
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