Citco's latest Middle Office Solutions report covering activity in Q3 2025 has just been released, revealing the latest trends in middle office outsourcing.
Summary
A note of caution sounded through markets in Q3 even as volatility dropped in equity markets, with volumes across the suite of Middle Office services broadly flat.
The Citco group of companies’ (Citco) Middle Office Solutions team saw treasury payment volumes edge up, while collateral volumes also rose. However, this was countered by a fall in futures and options activity across trade operations as managers faced concerns over future revenue growth, reduced volatility and geopolitical uncertainty, presenting them with fewer trading opportunities.
With a long-awaited Federal Reserve rate cut to 4%-4.25% to factor in, alongside the usual decline in activity during the summer, most areas of middle office services were more muted in Q3. Across the suite of Middle Office services there was a decline in the value of treasury transactions and collateral margin movements, despite volumes rising.
In the current climate, it has never been as important to have a reliable, efficient middle office. More managers than ever before are using Citco Middle Office Solutions’ team and tools, and outsourced solutions, to save time and money.
In-house teams should be looking to outsource key middle office functions to specialists that have the technology, scalability and expertise to rapidly identify issues and streamline processes to better handle increased activity.
Citco’s offering covers Treasury and Collateral Management, OTC settlements, and Trade Matching. We designed our cloud-based Æxeo® Treasury platform to offer a streamlined, centralized access point for approval of wires, providing you with clarity on whether funds have been paid and received. Our trade matching solution allows for the automation and streamlined matching of trading on T+0, resulting in a decrease in breaks on T+1.
Whether you’re a manager, insurer, or corporate, we understand the challenges you face when it comes to effectively scaling your middle office, and we are here to help.
Our data insights
Citco’s Middle Office Solutions team has compiled data on overall trade volumes, values and collateral calls for Q3 2025.
Data on payments volumes and collateral moves are constituted by all dispatched payments including Letter of Acceptances. All data is drawn from clients using our 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 $2T+ in Assets Under Administration.
Treasury volumes and values
Citco’s Æxeo® Treasury platform saw an increase in the number of treasury transactions processed in Q3 versus the previous quarter, rising 1% to nearly 172,000 transactions.
However, there was a decline in the value of treasury transactions which had been steadily rising over previous quarters. The total value dropped 14% to $559bn, reversing much of the recent gains.
The drop was reflective of a reduction in volatility and the impact of the Fed rate cut, although Q3 2025’s figure was still significantly ahead of the same quarter last year.
Other areas of treasury services were broadly flat; Invoice transactions dipped 1%, while margin/broker transfers rose 3% each.
While the figures are less eye-catching than last quarter’s, the long-term trend remains in place, with consistent demand for outsourced middle office solutions.
Collateral calls
Collateral volumes rose once more in Q3, with September’s monthly tally only just shy of the high seen year-to-date in March.
he quarter saw margin volumes rise 4% in total to almost 25,000 trades, but a decline in futures and options and over the counter trading sparked a dip in the value of margin movements posted from $70bn in Q2 to $59bn in Q3.
Elsewhere, it was business as usual for cash and securities collateral trades, both of which saw volumes rise 5% and 1% respectively.
Citco’s Æxeo® Treasury platform, which integrates seamlessly with Citco’s proprietary Æxeo® Collateral and Invoice Management module, provides a completely end-to-end workflow for tracking collateral movements. Our collateral management tool is directly integrated into Swift via Æxeo® Treasury so that once a collateral movement is agreed to, it flows to treasury for approval and then into Swift, all using straight through processing.
Trade operations
Having seen a sharp jump in trade operations activity in Q2, Q3 saw a reversal as a combination of flagging confidence in future revenue growth and a switch in market sentiment combined to dampen activity.
Citco saw a 14% drop overall in the number of affirmed trades, with a decline in futures and options trading having a clear impact. Futures and options trade volumes fell 15% in Q3, although this was countered somewhat by a 5% rise in FX trades.
Citco’s infrastructure and follow the sun coverage meant the number of trades affirmed on T rose 1% to 98%.
How we can support and improve your Middle Office
Citco is an outsourced partner for middle office for 500 clients, with our range of services designed to support managers as they look to scale up their businesses by using the latest technology available.
- Legacy treasury management requires the use of physical tokens and separate usernames and passwords for all of a firm’s different banking portals. A company’s cash management can be severely hindered, with payments halting if any of these expire. Citco designed the cloud-based Æxeo® Treasury platform with this in mind, and its functionality allows for streamlined, centralized access for approval of wires, removing the need for tokens, and providing clients with clarity on whether funds have been paid and received.
- In this time of heightened uncertainty, companies are unsurprisingly paying more attention to where they are exposed to counterparty risk; for example, are their internal teams on call and need to know if they have excess funds to pull from? This can be difficult to quickly assess, however Citco's Æxeo® Collateral platform was designed with this issue in mind. It can provide companies’ treasury teams with this information instantly, along with daily management reporting for quick and timely decision-making. Citco also has a dedicated team for the timely and accurate management of counterparty exposure and daily calls which is ready to manage a significant increase in margin movement so that companies avoid being labelled as a credit risk.
- Increased trading volumes create the potential for reconciliation issues in the form of an increase in breaks. Citco's scalability means our team can handle increased volumes and break resolution directly to the street. Citco’s Æxeo® Trade Operations solution allows for the automation and streamlined matching of trading on T+0, resulting in a decrease in breaks on T+1. Citco can also help companies by providing daily-dedicated coverage to handle street-facing break resolution and timely settlement of OTC trades and related cash flows.
- Citco's collateral management tool is directly integrated into Swift via Æxeo® Treasury. Once a collateral movement is agreed, it flows to treasury for approval and then into Swift – all STP.
So far in 2025 we have seen record activity as clients outsource more, and we've not been surprised by the broad increase across our different services.
We are in the age of middle office, with managers starting to see the benefits of advancements in outsourcing and the technology offered, which they can utilize to help scale their own businesses faster.” - Ryan Fitzgerald, Head of Middle Office Solutions, Citco Fund Services (USA) Inc.
Overview of Middle Office Solutions
Reduce costs, add scale and minimize operational risk by partnering with Citco and our proprietary technology.
Data Services
- Curated data accessed through a web portal with multiple pick up and delivery methods
- Enrich with client own or vendor data
- Run on-demand, self service scheduling and event based invocation
Treasury Management
- Facilitate cash movements on client’s behalf
- Initiate and maintain Swift connectivity with paying agents
- Maintain wire instructions
- Liaise with bank reps as required
- Invoice Management
OTC Settlements
- Settle your OTC payments
- Break resolution with counterparty
- Independent calculation of OTC cash flows
Trade Operations
- Confirmation and matching of trade details on T and T+1
- Break resolution
- Maintain interface connectivity to primary vendors
- Prime Broker Fails Monitoring
- Near real-time online trade status dashboard
Collateral Management
- Calculation of collateral on bi-lateral and cleared OTC derivatives
- Exposure and Independent Amount analysis
- Margin break resolution/escalation
- Tracking and settlement of monthly interest on posted and held collateral
- End to End Uncleared Margin Rules (UMR) solution including independent regulatory initial margin calculation
Citco Middle Office Solutions combine our teams’ subject matter expertise with leading proprietary technology to help reduce costs, add scale and ultimately minimize operational risks associated with missed control processes.
Middle Office Solutions is comprised of five areas:
- Treasury Management
- Collateral Management
- OTC Settlements
- Trade Operations
- Data Services
Our holistic offering aims to provide clients with:
- A scalable middle office
- Reduced cost structure
- Easy ‘plug and play’ offerings
- Best in class proprietary technology
- Headcount efficiency
Reducing credit risk in unsecured financial transactions
Æxeo® Collateral System provides users access to daily portfolio collateral exposure levels based on active collateral agreements across their portfolios.
The system allows clients to see the independent breakdown of a collateral agreement based on exposure and the negotiated parameters including minimum transfer amounts, rounding, notification times and more. For firms captured by the UMR regulations, Citco Middle Office Solutions offers a complete end-to-end operational infrastructure connected directly to counterparties including trade level reconciliation, regulatory margin calculation (SIMM or GRID) and margin settlement via SWIFT (cash, securities or RQV).
Reducing Operational Complexity
A collateral system infrastructure that removes manual operational activities that can generate risk and be time consuming. UMR regulations have created a brand new level of complexity for firms to exchange initial margin that Citco have solved for using an end-to-end flow with connectivity to counterparties and custodians.
Expertise
With the movement from exposure based margin calculations (variation margin) to risk sensitivity based (regulatory initial margin), a new skillset is needed to generate and validate the data. Citco has the capability to do both whereby a team of quants interpret the sensitivity data and generate the relevant regulatory reports (CRIF) to validate to the street.
Secure Settlement
Post margin verification and notification times, a critical step is the secure settlement. Leveraging Citco’s SWIFT infrastructure enables firms to settle cash, securities and triparty required value (RQV) in a secure and transparent way.
