UK Regulators Fine Citigroup Over Trading System Failures

Britain’s banking and financial regulators have imposed a fine of more than £61.6 million ($78.5 million) on U.S. bank Citigroup for failures in its trading systems and controls. 

This fine marks one of the largest penalties for controls breaches in the UK since the global financial crisis in 2008-2009.

Incidents Leading to the Fine:

The Prudential Regulation Authority (PRA) stated that issues at Citigroup Global Markets Limited (CGML) had resulted in “trading incidents,” including one in May 2022 where an “experienced trader incorrectly inputted an order,” leading to the execution of $1.4 billion on European exchanges by mistake. 

The PRA attributed these incidents to deficiencies in CGML’s trading controls, highlighting the absence of certain preventative measures and the inappropriate calibration of other controls.

Persistent Weaknesses and Regulatory Communication:

Despite repeated supervisory communication from the PRA to improve, weaknesses in Citigroup’s trading systems and controls persisted, according to the regulator. 

The PRA fined Citigroup £33.88 million for failings between April 1, 2018, and May 31, 2022, with a 30% reduction after Citigroup agreed to address the issue. 

The Financial Regulation Authority imposed an additional fine of £27.76 million following an investigation into similar matters.

Regulatory Perspective and Citigroup’s Response:

Sam Woods, CEO of the PRA and the Bank of England’s deputy governor for prudential regulation, emphasized the importance of effective controls in trading operations and noted Citigroup’s failure to meet expected standards in this area. 

In response, Citigroup spokesperson Victoria Durman acknowledged the incident from over two years ago as an individual error promptly corrected. 

She highlighted Citigroup’s immediate actions to strengthen systems and controls and affirmed the bank’s commitment to regulatory compliance.