The Financial Conduct Authority has imposed a financial penalty of £27,766,200 on Citigroup Global Markets Limited for failures in its systems and controls governing equity trading, the regulator announced on 22 May 2024. The fine centres on a specific incident in May 2022 in which a trading error by a member of CGML's staff led to US$1.4 billion of erroneous sell orders being executed across European exchanges, coinciding with a brief sharp fall in several European indices.
The May 2022 episode has been described as a 'fat finger' error, a term used in trading to refer to the unintentional entry of a trade order with incorrect parameters. In this case, a trader at CGML who intended to sell a US$58 million basket of equities mistakenly loaded a basket with a notional value of approximately US$444 billion. Controls blocked part of the basket, but US$189 billion of orders reached a trading algorithm and US$1.4 billion were executed before the trader cancelled the remaining orders at 09:10, coinciding with a fall of just over 4% in the MSCI Europe ex UK index within five minutes.
FCA FINDINGS
The FCA's investigation concluded that the overall control framework was inadequate given the scale and automation of the trading activity being conducted.
The FCA found that the incident exposed longer-standing control gaps: the desk involved had no basket-level hard block, a US$2 billion per-order hard limit was set too high to be effective, traders could override multiple soft-limit pop-up alerts without reading them, and a key suspension control loosened at the start of the COVID-19 pandemic had not been reviewed. The Prudential Regulation Authority separately fined CGML £33.88 million for failures in its trading systems and controls, taking the combined UK penalties to about £61.6 million.
For CGML, the £27.77 million penalty follows what the FCA described as significant remediation already undertaken by the firm in respect of its trading controls.