Pan-European electronic fixed income network MTS has lifted the temporary trading restrictions that were introduced following Citigroup's controversial bond trading activity on the platform at the beginning of August.
Citigroup traded a total of EUR11 billion of securities in two minutes over the MTS platform on 2 August. As the value of futures contracts went into freefall and traders moved to cover positions, Citigroup re-entered the market and bought back about EUR4 billion of the paper at cheaper prices. Financial regulators in the UK, France and Germany subsequently launched investigations into Citigroup's trading activity.
The move prompted MTS to limit the value and volume any one dealer can push through the system in a two minute period to either EUR1 billion on MTS and EuroMTS and EUR500m on MTS Deutschland, or 20% of the total daily market volume, based on the average market volume over the past 10 trading days.
Commenting on the lifting of the restrictions, Gianluca Garbi, chief executive, MTS, says the decision "fully reflects market consensus" and was taken following a recommendation from an internal committee composed of market participants responsible for reviewing trading rules.
"Our priority at MTS, which is integral to our model, is to reflect the structure of the European bond market and this, in turn, is synonymous with ensuring that the requests of market participants are continuously addressed," says Garbi.