The UK’s banking and financial regulators have slapped Wall Street titan Citigroup with a £61.6m fine for trading systems and controls failures that led to $1.4bn (£1.1bn) worth of European equities being mistakenly sold in 2022.
The Financial Conduct Authority (FCA) found that due to “poor design” and “ineffective” real-time monitoring, a London trader was able to send $189bn (£155bn) to a trading algorithm – despite intending to sell a basket of equities worth $58m (£46m).
The trader had originally created a basket worth $444bn (£348bn), with Citi’s controls blocking $255bn (£200bn) from progressing, the FCA said.
It added that the trader was able to manually override a pop-up alert without having to scroll down and read the alerts within it and that the firm’s systems were too slow to escalate internal alerts about the error.
A total of $1.4bn (£1.1bn) of equities were sold across European exchanges before the trader cancelled the order, the FCA said, which triggered “a material short-term drop in some European indices which lasted a few minutes”.
The FCA fined Citi £27.77m, while the Bank of England’s Prudential Regulatory Authority (PRA) fined it £33.88m for related matters between 1 April 2018 and 31 May 2022.
Both penalties, among the largest of their kind since the financial crisis. were reduced by 30 per cent after Citi agreed to settle and resolve the issue.
A Citi spokesperson said: “We are pleased to resolve this matter from more than two years ago, 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.”
Steve Smart, co-head of enforcement at the FCA, commented: “These failings led to over a billion pounds of erroneous orders being executed and risked creating a disorderly market.
“We expect firms to look at their own controls and ensure that they are appropriate given the speed and complexity of financial markets.”