The UK’s Financial Conduct Authority (FCA) has fined Citigroup Global Markets £12m for failing to properly implement the Market Abuse Regulation (MAR) trade surveillance requirements relating to the detection of market abuse.
The regulator stated that by failing to 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.
MAR was implemented in 2016 and expanded requirements to detect and report potential market abuse. It introduced a requirement to monitor both orders and trades to detect potential and attempted market abuse across a broad range of markets and financial instruments.
However, the FCA claimed it found that Citigroup failed to properly implement the new requirements when it took effect, and took 18 months to identify and assess the specific market abuse risks its business might have been exposed to and which it needed to detect.
It claims that Citigroup Global Markets’ flawed implementation resulted in significant gaps in its arrangements, systems, and procedures for additional trade surveillance.
Mark Steward, executive director of enforcement and market oversight, said, “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.”
Citigroup Global Markets agreed to resolve this case and qualified for a 30% discount. Prior to the discount, the fine value was £17m.
Last week, the US’ Federal Reserve Board fined Maryland-based EagleBank $9.5m for violating the board’s insider lending regulation. It claims that the bank ‘improperly extended credit to entities owned or controlled by its then-CEO and chairman Ronald D. Paul.’
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