FCA and PRA fine £60m for failures in trading systems and controls

The FCA and the PRA have imposed fines totalling over £60m on Citigroup Global Markets Limited (CGML) for failures in its trading systems and controls between April 2018 and May 2022.

The FCA, which fined CGML £27,766,200, and the PRA, which imposed a £33,880,000 penalty, conducted their investigations in parallel. The most significant trading incident occurred when a trader inputting error led to a basket of equities to the value of US$444bn being created, rather than the intended US$58m. Whilst CGML controls blocked US$255bn of the basket progressing, the remaining US$189bn was sent to a trading algorithm, and US$1.4bn of equities were sold across European exchanges before the trader cancelled the order.

Poor design meant the trader could override pop-ups alerting them to the amount, and slow real-time monitoring did not escalate alerts about the trades effectively enough to stop the process.

The FCA found CGML had breached Principles 2 and 3 as well as Rule 7A.3.2 of MAR, and the PRA found breaches of Fundamental Rules 2, 5 and 6 as well as Rules in the Algorithmic Trading part. The regulators found the failings all the more “egregious” because the PRA had given repeated feedback to the firm on the poor state of its trading controls – which had also been flagged by the the firm’s internal risk and compliance teams.

CGML did not dispute either regulators’ findings, qualifying them for a discount of 30% with both the FCA and PRA.

Harry Wells