Financial regulators have fined Citigroup £61.6m after their internal systems failed in preventing a fat-fingered Banker from causing a Flash Crash by placing erroneously more than £1bn worth of orders.
The trader intended to sell $58m worth of equities on 2 May 2022. The banker entered the transaction incorrectly into Citigroup’s Order Management System, resulting in a $444bn equities basket. $1.4bn of that amount was sold to the market.
Financial Conduct Authority (FCA announcedit will fine Citigroup Global Markets £27.77m for the incident that occurred on 2 May 2022 which caused a stock market crash in Europe. After its own investigation, the Prudential Regulation Authority (PRA), imposed a fine of £33.88m.
The Citigroup trader (whose name was not disclosed) entered the value of a basket of stocks in the wrong field of the order system.
The banker planned to enter 58m in the “notional field” of the Citigroup Order System, which would create a basket worth the value of that amount in dollars. They entered 58m instead into the “quantity field” of the order system, creating a giant 349 stock basket with a notional value of $444bn.
Citigroup’s system internally blocked 255bn dollars of the basket of stocks from progressing. The remaining $189bn, however, was sent to an algorithm which sold shares in the market throughout the rest of that day. This resulted in a $1.4bn total sale of equity across European stock exchanges.
The FCA stated that the trader could manually override an alert pop-up without having to scroll down to read all of the alerts contained within. It also said the US bank’s real-time monitor was “ineffective”, which meant it was “too slow” to escalate internal alarms about the incorrect trades.
The banker realized the mistake 15 minutes after the trade was made and cancelled it.
Citigroup is embarrassed by the error that resulted in an $48m loss.
Citigroup settled with the FCA and received a 30% reduction on the fine, which would have otherwise been £39.66m. If the bank had challenged the findings, the PRA’s fine of £33.88m could have been £48.4m.
In a press release, the bank stated: “We’re pleased to have resolved this issue from over two years ago. It was caused by an individual mistake that was quickly identified and corrected. We immediately strengthened our systems and controls and remain committed in ensuring regulatory compliance.
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