Citigroup Global Markets (CGML) has been fined £27.8m by the Financial Conduct Authority after a trader inputting error led to $1.4bn (£1.1bn) equities being sold on European exchanges by mistake.
The Prudential Regulation Authority has also imposed a £33.9m penalty following its own investigation.
The incident occurred on 2 May 2022, when a CGML trader had intended to sell a basket of equities valued at $58m.
In a statement this morning (22 May), the FCA said the trader made an inputting error while entering the basket in an order management system, resulting in a basket worth $444bn being created instead.
While the trader cancelled the order, equities worth $1.4bn had already been sold to the market.
“This coincided with a material short-term drop in some European indices which lasted a few minutes,” the regulator said.
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CGML accepted the FCA’s findings and agreed to settle, which resulted in a 30% discount on the financial penalty imposed.
The FCA added that while parts of the firm’s trading control framework operated as expected, some primary controls were ‘absent or deficient’, highlighting the absence of a hard block that would have prevented such a large erroneous basket from reaching the market.
Steve Smart, joint executive director of enforcement and market oversight at the FCA, said: “The FCA expects firms engaged in trading activities, including those using algorithmic trading, to have effective systems and controls in place to stop errors like this occurring.
“These failings led to over a billion pounds of erroneous orders being executed and risked creating a disorderly market. We expect firms to look at their own controls and ensure that they are appropriate given the speed and complexity of financial markets.”
