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Citigroup Fined £61.6 Million Over Trader Blunder

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Financial regulators have fined Citigroup £61.6 million after an error caused a flash crash by mistakenly placing over £1 billion in orders.

The incident on 2 May 2022 saw a Citigroup trader intending to sell equities worth $58 million (£46 million).

However, due to an input error, the trader entered the transaction incorrectly.

This resulted in a giant equities basket of $444 billion, with $1.4 billion sold into the market.

The Financial Conduct Authority (FCA) fined Citigroup Global Markets £27.77 million.

The Prudential Regulation Authority (PRA) imposed an additional £33.88 million penalty following their investigations.

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The error occurred when the trader mistakenly entered the value in the wrong field of Citigroup’s order system.

Instead of inputting 58 million into the “notional” field, which would have created a basket of equities worth $58 million, the trader entered the figure into the “quantity” field.

It resulted in a basket of 349 stocks with a total notional value of $444 billion.

Citigroup’s real-time monitoring was too slow to catch the error in time

Citigroup’s internal system blocked $255 billion of the equities basket from progressing, but the remaining $189 billion was sent to a trading algorithm.

This algorithm sold shares into the market for the rest of the day, totaling $1.4 billion across European stock exchanges.

The FCA noted the trader manually overrode a pop-up alert without fully reading all the warnings, and Citigroup’s real-time monitoring was too slow to catch the error in time.

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The erroneous trades coincided with a brief but significant drop in several European markets.

The mistake was discovered, and the trade was canceled 15 minutes later, but not before Citigroup incurred a $48 million loss.

Citigroup agreed to settle with the FCA, receiving a 30 percent discount on the fine, reducing it from £39.66 million to £27.77 million.

The PRA’s penalty of £33.88 million would have been £48.4 million if the bank had contested the findings.

Citigroup said: “We are pleased to resolve this matter from more than two years ago, which arose from an individual error that was identified and corrected within minutes.

“We immediately took steps to strengthen our systems and controls and remain committed to ensuring full regulatory compliance.”

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