A Citi trader intending to sell $58 million of shares ended up selling $1.4 billion. Now the bank has been fined.

By Steve Goldstein

Trading incidents including one where Citigroup executed $1.4 billion of sell orders when intending to sell $58 million of shares led British regulators on Tuesday to fine the bank over trading controls.

The Bank of England and the Financial Conduct Authority fined Citi (C) a combined GBP61.6 million ($78.4 million) for failings in trading systems and controls between 2018 and 2022.

The most serious happened on May 2, 2022, which was a local holiday in the U.K. A trader in its Delta 1 business that services institutional investors, corporations and hedge funds, intending to sell $58 million of equities, erroneously inputted a basket of 349 stocks across multiple European markets with a notional value $444 billion. The issue was that the trader entered the value of the basket of equities in the unit quantity field instead of the notional value field.

"The immediate cause of the trading error was an input mistake by a trader, but as a result of primary control failings, erroneous orders with a notional size of $196 billion were generated in the firm's electronic trading system, CitiSmart, for execution and were not subsequently cancelled in their entirety, such that in total, $1.4 billion of sell orders were executed across various European exchanges," the Bank of England said.

The resulting mayhem sent the MSCI Europe ex-UK index down over 4%.

It was the trader who discovered the error approximately 15 minutes after entering the order. The trading incident resulted in a $48 million loss for Citi, the FCA said.

The Bank of England noted that Citi repeatedly was given feedback about the poor state of its trading controls.

Citi said it was pleased to resolve the matter and that it has taken steps to strengthen its systems and controls.

-Steve Goldstein

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05-22-24 0516ET

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