FSA fines Citigroup £13.9m for Eurobond trades

The UK's Financial Services Authority has fined Citigroup £13.9 million following its investigation into the bank's controversial trading in the European government bond and bond derivative markets last August.

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FSA fines Citigroup £13.9m for Eurobond trades


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The market was thrown into confusion on 2 August last year when Citigroup pushed through a total of EUR11 billion in paper sales in two minutes over the automated MTS platform. As the value of futures contracts fell and traders moved to cover their positions, Citigroup re-entered the market and bought back about EUR4 billion of the paper at cheaper prices.

The FSA said it has fined Citigroup for failing to conduct business with due skill, care and diligence and failing to control its business effectively.

The fine consists of the £9.96 million profit that Citigroup made on the trades along with a £4 million penalty.

Hector Sants, FSA managing director for wholesale business, says the bank "planned, authorised and executed a trading strategy without having due regard to the risks and likely consequences of its action for the efficient and orderly operation of the MTS platform".

Sants says a lack of adequate systems and controls meant that the strategy was never fully considered, as would be expected, at an appropriate senior level within the bank.

In a statement, Citigroup says the FSA acknowledges that it did not deliberately set out to disrupt the efficient and orderly operation of the MTS platform.

William Mills, chairman & CEO, corporate and investment banking in EMEA, and Tom Maheras, CEO of global capital markets, say: "Today's decision confirms our position that the trade did not breach rules of market conduct. However, we regret that this trade took place because it did not meet our high standards and consequently caused damage to Citigroup's reputation."

The bank escaped a penalty by the Frankfurt regulator over the same trades earlier this year after the prosecutor ruled that the trading didn't violate laws in place at the time.

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