- The Prudential Regulation Authority has fined Citi £33.9m
- Meanwhile, the Financial Conduct Authority imposed a fine of £27.8 million.
UK regulators have fined Citigroup almost £62m over failings that led to a trader incorrectly selling shares worth around $1.4bn (£1bn).
The Prudential Regulation Authority has imposed a £33.9m fine on the banking giant’s global markets arm, while the Financial Conduct Authority has imposed a £27.8m fine.
These fines relate to errors in the company’s business systems and controls; the most serious occurred in early May 2022.
Punished: UK regulators have fined Citigroup £62 million for failings that led a trader to wrongly sell around $1.4 billion (£1 billion) in shares.
According to the FCA, a Citi trader planned to sell $58 million in shares but made an entry error that created a basket worth $444 billion.
Citigroup managed to stop the progress of $255 billion of the basket, but $189 billion was still sent to a trading algorithm, of which $1.4 billion was accidentally executed on European exchanges.
After the trader canceled the order, some European indices experienced a short-term decline that lasted a few minutes.
Regulators said the incident was caused by the absence of primary controls, such as a hard block that would have prevented such a huge volume of shares from reaching the market.
They also discovered that the trader could override a pop-up alert containing a limit price warning without needing to scroll down and read all the notifications it contained.
Because Citi agreed to settle the matter, it received a 30 per cent discount on each of the fines, which would otherwise have totaled £88 million.
However, the fines remain one of the largest for controls breaches in the UK since the 2008/09 global financial crisis.
Steve Smart, joint executive director of enforcement and market oversight at the FCA, said firms involved in trading activities need to “have effective systems and controls in place to prevent errors like this from occurring”.
He added: “These failures led to over £1bn of erroneous orders being executed and risked creating a disorderly market.”
“We expect companies to review their own controls and ensure they are appropriate given the speed and complexity of financial markets.”
Since the trading incident two years ago, Citi has undertaken significant remediation work to improve its controls.
In a statement, Citi said: “We are pleased to resolve this more than two-year-old matter, which arose from an individual error that was identified and corrected within minutes.”
“We immediately took steps to strengthen our systems and controls, and remain committed to ensuring full regulatory compliance.”