US securities firm Goldman Sachs has been barred from trading on an electronic government bond trading system operated by pan-European bond exchange network MTS after allegedly violating market-making rules.An MTS spokesman has told reporters that Goldman has been suspended from the NewEuroMTS platform, where banks trade government bonds from central EU countries that have not yet joined the euro zone.
Goldman has been suspended since 2 January under new MTS regulations that can automatically bar banks that do not fulfil market-making obligations.
Citigroup was the last big US securities firm to be banned from an MTS platform. In August 2004 the US bank pushed through EUR11 billion in paper sales in two minutes over the automated MTS platform. As the value of futures contracts fell and traders moved to cover their positions, Citigroup re-entered the market and bought back about EUR4 billion of the paper at cheaper prices.
The Financial Services Authority later imposed a fine of £13.9 million fine on Citigroup "for failing to conduct business with due skill, care and diligence and failing to control its business effectively".
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