Trader Talk

What You Need to Know About Citi

Mark Lennihan

Citi will be trading a lot of shares in the next few days-but don't expect big price swings.

Recall that a short while ago Citi completed a big exchange of its preferred stock for common stock. Today, the Russell indexes are rebalancing at the close to reflect the increased weighting of Citi in the indexes (most importantly the Russell 1000).

Traders tell me there will be about 185 million shares of Citi to buy at the close.

This sounds like a lot-but it isn't really.

That's because Citi volume has been truly historic recently.

Citi is averaging about 500 m shares a day, but in the last three days has been trading OVER 1 BILLION SHARES A DAY.

This is probably because traders are setting up for today's trade, as well as the trade on the close next Wednesday, when the S&P 500 will also be rebalancing to account for the increased weighting of Citi in that index.

The S&P buy will be even more substantial-according to KBW, those indexed to the S&P will have to buy about 670 m shares of Citi toward the close, and will also be shorting the remaining 499 components in the S&P. 



Questions?  Comments?