Citigroup Global Markets Inc. has been sanctioned in a settlement with the regulatory division of the Bourse de Montreal Inc. (MX) over reporting deficiencies uncovered in a compliance review.
The MX disciplinary committee approved a settlement in which Citigroup agreed to a fine of $138,000 and to pay $10,600 in costs to resolve violations stemming from derivatives reporting violations that were first detected in 2019.
According to the settlement, the Bourse carried out a compliance exam in 2019 of Citigroup that found “a number of critical findings … related to misreporting” of the firm’s trading positions.
In 2020, the MX opened an investigation, which ultimately concluded that its rules were breached in connection with the reporting issues.
Specifically, in a sample of 25 random trading days, MX found 43 examples of incorrectly reported positions.
“The investigation revealed that the [firm’s] procedures applicable at that time did not explain how [large open position reporting] was monitored or supervised to ensure accuracy of the data submitted to the Bourse, or how position limits are monitored,” MX said.
The Bourse also found there was no formal training at the firm on complying with these reporting requirements.
“[Large open position reporting] requirements are serious in nature and are a cornerstone of market integrity as they allow the Bourse to monitor any concentration of positions that may result in manipulative activities,” it noted.
The Bourse alleged these failings breached various rules.
The settlement noted that Citigroup cooperated with the investigation, and that it has corrected its reporting weaknesses.
The disciplinary committee approved the settlement, but said more could have done to assess the possible financial impact of the reporting violations: gains generated, losses avoided or costs saved.