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September 17, 2018

Citigroup fined $12m for trading violations

Citigroup has been fined more than $12m to resolve charges by the US Securities and Exchange Commission (SEC) that its affiliate Citigroup Global Markets misled users regarding dark pool trading.

SEC alleged that the affiliate offered false assurances to users that high-frequency traders were barred from trading on Citi Match, which is a dark pool platform operated by Citi Order Routing and Execution (CORE).

In reality, two of the most-active users on the platform were high-speed traders who carried out  orders worth over $9bn through the dark pool, SEC said.

The regulator also alleged that in reality half of the company’s dark-pool orders were routed to and executed on other trading platforms.

However, the company concealed the information from its users for over two years, SEC said, and instead sent trade confirmation messages to users that showed that their orders had been executed on Citi Match when in reality they were executed on other venues.

SEC enforcement division chief of market abuse unit Joseph Sansone said: “Market participants deserve to make informed decisions about where they execute their orders.

“All trading venues, regardless of their trade volume, must ensure that their users have accurate information, particularly about key issues like order routing.”

As settlement, Citigroup will pay a penalty of $6.5m and disgorgement and prejudgment interest of $5,437,475, while CORE will pay a penalty of $1m.

The bank agreed to the settlement without admitting or denying the charges.

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