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Broker-dealer Citigroup was penalized $15 million for poor U.K. trade monitoring

The Financial Conduct Authority (FCA) of the United Kingdom fined Citigroup's international broker-dealer 12.6 million pounds (U.S. $14.9 million) for failing to put in place a sufficient trading monitoring program needed by British law.

By failing to "properly implement the Market Abuse Regulation (MAR) trade surveillance requirements relating to the detection of market abuse," which includes insider trading and market manipulation, Citigroup Global Markets, a Citigroup subsidiary with offices in London, was found to have violated the FCA's rules on Friday.


When the rule went into effect in 2016, Citigroup Global Markets did not comply with it. According to the FCA, it took the broker-dealer 18 months to "identify and assess the specific market abuse risks its business may have been exposed to and which it needed to detect."


Both trades and orders must be watched over according to the MAR. According to the FCA, the broker-purported dealer's failings "resulted in significant gaps in its arrangements, systems, and procedures for additional trade surveillance."

According to Mark Steward, the FCA's executive director of enforcement and market oversight, "the framework for market integrity depends on the partnership between the FCA and market participants using data to detect suspicious trading." "By not fully implementing the new provisions when required, Citigroup Global Markets did not carry its full weight in this partnership, impacting market integrity and the overall detection of market abuse."


The FCA's final order states that Citigroup Global Markets started its risk analysis for compliance with the MAR in December 2017, even though the law had been passed a year earlier. The ruling stated that after the evaluation was under way, the broker-dealer failed to account for secondary laws that supported the MAR and failed to offer "the means to prioritize the most serious market abuse risks affecting its business."


Additionally, Citigroup Global Markets' MAR working group misled the broker-U.K. dealer's risk, compliance, and controls committee about the status of the MAR implementation and failed to adequately supervise the implementation of the broker-trade dealer's surveillance program.


In relation to its implementation of the MAR, Citigroup Global Markets did not "conduct its business with due skill, care, and diligence," according to the ruling.


The firm started a remediation program that, according to the FCA, corrected the most serious gaps by the end of that year after discovering compliance problems in January 2018.


An inquiry for comment was not immediately answered by Citigroup.

By fLEXI tEAM

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