UK Regulators Fine Citi

In the United Kingdom, local regulators imposed a fine of 62 million pounds ($79 million) on bank Citi, which head office is located in New York.

UK Regulators Fine Citi

The mentioned decision was announced on Wednesday, May 22. Regulators from the United Kingdom said that failures in the trading systems of a financial institution triggered the dump onto of $189 billion worth of shares on European markets.

The Financial Conduct Authority (FCA) has decided to apply a measure of influence against the lender in the form of a fine of almost 28 million pounds. At the same time, the Bank of England’s Prudential Regulation Authority (PRA), after investigating certain aspects of the financial institution’s activity, fined Citi almost 34 million pounds.

It is worth noting that UK regulators have reduced the amount of their money impact measures by 30%. This decision was made because the financial institution agreed to settle the matter. If the bank had refused the mentioned settlement, the amount of fines would have exceeded the £88 million mark.

As part of the study of Citi’s experience over the past few years, the financial regulator of the United Kingdom drew attention to an incident that occurred in May 2022. In this case, a trader’s mistake is implied, which provoked the sale of shares worth $1.4 billion on European exchanges.

The FCA statement notes that the mentioned trader initially planned to sell securities worth only $58 million. However, an inputting error caused the original plan to be overfulfilled on an extraordinary scale, which became a significant problem.

It is worth noting that the trader’s actions could provoke more global consequences. This employee of a financial institution mistakenly ordered the sale of shares worth $444 billion. The bank’s systems have blocked $255 billion of the mentioned amount. After that, $189 billion was sent to the Citi trading platform for sale. In total, $1.4 billion worth of stocks were sold. This process could have continued further, but the trader canceled the transaction after detecting an error.

After the incident, the financial institution took measures to improve and strengthen the security of its trading systems. The relevant information is contained in the message of the Bank of England.

Sam Woods, Deputy Governor and Chief Executive Officer of PRA, says that trading companies must have effective controls to manage risks. According to him, Citi does not meet the standards provided for the mentioned area of activity, which was the reason for the decision on the fine.

A spokesperson for the financial institution, in a comment to the media, said that the bank was pleased to resolve the problem, which occurred more than two years ago and was provoked by an individual error, identified and corrected within a few minutes. Also in this context, it was noted that the lender immediately took steps to strengthen its control systems and remains committed to ensuring full compliance with regulatory requirements.

Under the leadership of CEO Jane Fraser, Citi is seeking to address long-standing and widespread weaknesses in risk management, data governance, and internal controls. The main way the financial institution’s unit in London was able to quickly deal with trader error was through a so-called hard block.

As we have reported earlier, Citi’s Chief Digital Officer Says About Significance of Mobile and Virtual Platforms.

Serhii Mikhailov

2376 Posts 0 Comments

Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.