The UK’s Financial Conduct Authority (FCA) has imposed a £12.5 million fine on Citigroup Global Markets due to its previous failures to adequately oversee trading activities.
The penalty is related to market abuse regulations implemented in 2016, designed to combat insider trading and market manipulation. These regulations required firms to monitor trading activities across various markets and instruments.
According to an FCA statement, Citigroup Global Markets, the UK-based international broker dealer arm of the investment bank, did not fully apply these regulations until January 2018, resulting in significant deficiencies in its trade surveillance arrangements, systems, and procedures. During the 18-month period in question, Citi generated over £2.5 billion from arranging and executing trades.
The firm managed to reduce the fine from £18 million by seeking a 30% discount in exchange for agreeing to resolve the case. Mark Steward, executive director of enforcement and market oversight at the FCA, remarked, “The framework for market integrity depends on the partnership between the FCA and market participants using data to detect suspicious trading. By not fully implementing the new provisions when required, Citigroup Global Markets did not carry its full weight in this partnership, impacting market integrity and the overall detection of market abuse.”
In a statement, Citi expressed that it was “pleased to put the matter behind us.” Additionally, the Financial Times reported that the bank’s CEO, Jane Fraser, has allocated $11 billion for its technology budget this year to enhance its regulatory reporting capabilities.