Citi Fined $79 Million by UK Regulators Over Trading System Failures

UK regulators fined Citi $79 million over trading system failures. The fines were issued by the PRA and the FCA, following an investigation that spanned from 2018 to 2022. The bank has since taken steps to strengthen its systems and controls.

Paolo Munar
05/23/2024

05/23/2024Citigroup Global Markets Limited (CGML), a prominent U.S. investment bank, was slapped with a hefty fine of £61.6 million ($79 million) by British regulators. This substantial penalty, issued on Wednesday, highlights the significant shortcomings in CGML’s trading systems and controls.

The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), two of the most influential regulatory bodies in the UK, were the ones who imposed the fines. Their thorough investigation covered a period from April 1, 2018 to May 31, 2022. After agreeing to settle the matter, CGML was eligible for a 30% reduction of the fine.

Sam Woods, the Deputy Governor for Prudential Regulation and the CEO of the PRA stated, “Firms involved in trading must have effective controls in place to manage the risks involved. CGML failed to meet the expected standards in this area, resulting in today’s fine.”

System Issues

Problems with the system and controls continued to plague the investigation period, leading to business failures such as a 'fat-finger’ trading blunder. The most significant incident occurred on May 2, 2022, when an experienced trader incorrectly input an order, inadvertently executing $1.4 billion on European exchanges.

The statement read, “Deficiencies in CGML’s trading controls contributed to this incident, particularly the absence of certain preventative hard blocks and the inappropriate calibration of other controls.”

Citi Happy to Resolve

In response to the fine, a Citi spokesperson stated that the bank was pleased to resolve the matter more than two years ago, which arose from an individual error identified and corrected within minutes. They added, “We immediately took steps to strengthen our systems and controls and remain committed to ensuring full regulatory compliance.”

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