Citigroup Global Markets is to be suspended from trading on electronic bond network MTS for one month as punishment for its role in a controversial EUR11 billion trade conducted in August last year.
Citi's actions caused consternation in the European bond markets as traders executed a total of 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 one-month trading sanction was agreed by the MTS 'Wise Men' appeals committee, which ruled that Citigroup breached certain market regulations in pushing through the trades. In making its judgement, the committee criticised Citi for lack of professionalism and foresight, and for failing to educate its traders in the rules and regulations of the MTS marketplace.
In June, the UK's Financial Services Authority levied a £13.9 million fine against Citigroup for its role in the affair. The watchdog slammed the bank for "failing to conduct business with due skill, care and diligence and failing to control its business effectively".