United Kingdom’s Financial Conduct Authority (FCA) has fined Citigroup Global Markets, an indirect subsidiary of Citigroup Inc., £12,553,800 for breaching the Market Abuse Regulation (MAR) trade surveillance requirements relating to the detection of market abuse.
FCA, which announced the fine on Friday in a statement, said
the institutional brokerage services company failed to properly implement the regulation.
As a result, the broker breached Article 16(2) of MAR and Principle 2 of the
FCA’s Principles for Businesses, the regulator added.
While Article 16(2) requires organizations
involved in arranging or executing transactions in financial instruments to
establish and maintain effective arrangements, systems, and procedures to
detect and report potential market abuse, Principle 2 demands that “a firm must
conduct its business with due skill, care, and diligence.”
“By failing to properly implement the MAR trade
surveillance requirements, Citigroup Global Markets could not effectively
monitor its trading activities for certain types of insider dealing and market
manipulation,” FCA explained.
The watchdog further explained that Citigroup Global Markets’ flawed execution opened up gaps in its arrangements, systems,
and procedures for additional trade surveillance.
Sharing more details on the case, FCA noted that Citigroup
Global Markets failed to properly execute MAR’s requirement following its introduction in 2016.
According to the regulator, it took the brokerage
firm 18 months “to identify and assess the specific market abuse risks its
business may have been exposed to and which it needed to detect.”
FCA said Citigroup Global Markets qualified for a 30% discount after agreeing to resolve the case, thereby bringing the fine down from £17,934,030.
FCA and Trade Surveillance
In the statement, FCA explained that it depends on data gathered from
market participants to consolidate on its own surveillance mechanism for the detection of market abuse to
detect potential insider dealing and market manipulation.
The financial regulatory body further explained
that its Market Surveillance team undertakes specialist supervision of the
suspicious transaction and order reporting (STOR) regime, a feature of the
European Union regulation that seeks to prevent financial market abuse in Europe.
Under this regime, FCA noted, its team organizes
regular ad hoc visits to a broad range of market participants to assess
their market abuse surveillance arrangements.
“The framework for market integrity depends on
the partnership between the FCA and market participants using data to detect
suspicious trading,” explained Mark Steward, Executive Director of Enforcement and Market Oversight.
“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,” Steward added.
United Kingdom’s Financial Conduct Authority (FCA) has fined Citigroup Global Markets, an indirect subsidiary of Citigroup Inc., £12,553,800 for breaching the Market Abuse Regulation (MAR) trade surveillance requirements relating to the detection of market abuse.
FCA, which announced the fine on Friday in a statement, said
the institutional brokerage services company failed to properly implement the regulation.
As a result, the broker breached Article 16(2) of MAR and Principle 2 of the
FCA’s Principles for Businesses, the regulator added.
While Article 16(2) requires organizations
involved in arranging or executing transactions in financial instruments to
establish and maintain effective arrangements, systems, and procedures to
detect and report potential market abuse, Principle 2 demands that “a firm must
conduct its business with due skill, care, and diligence.”
“By failing to properly implement the MAR trade
surveillance requirements, Citigroup Global Markets could not effectively
monitor its trading activities for certain types of insider dealing and market
manipulation,” FCA explained.
The watchdog further explained that Citigroup Global Markets’ flawed execution opened up gaps in its arrangements, systems,
and procedures for additional trade surveillance.
Sharing more details on the case, FCA noted that Citigroup
Global Markets failed to properly execute MAR’s requirement following its introduction in 2016.
According to the regulator, it took the brokerage
firm 18 months “to identify and assess the specific market abuse risks its
business may have been exposed to and which it needed to detect.”
FCA said Citigroup Global Markets qualified for a 30% discount after agreeing to resolve the case, thereby bringing the fine down from £17,934,030.
FCA and Trade Surveillance
In the statement, FCA explained that it depends on data gathered from
market participants to consolidate on its own surveillance mechanism for the detection of market abuse to
detect potential insider dealing and market manipulation.
The financial regulatory body further explained
that its Market Surveillance team undertakes specialist supervision of the
suspicious transaction and order reporting (STOR) regime, a feature of the
European Union regulation that seeks to prevent financial market abuse in Europe.
Under this regime, FCA noted, its team organizes
regular ad hoc visits to a broad range of market participants to assess
their market abuse surveillance arrangements.
“The framework for market integrity depends on
the partnership between the FCA and market participants using data to detect
suspicious trading,” explained Mark Steward, Executive Director of Enforcement and Market Oversight.
“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,” Steward added.
