Citigroup Fined Over $444 Billion Trading Blunder

The whole point of these systems, and This is why the FCA and the PRA, the Bank of England Supervision arm, is going against City, is basically they're saying the controls were not in place to prevent these things. You know, sort of understandable. Someone might, you know, you hope they don't but might input things incorrectly. But what is meant to happen after that is a whole array of checks and double checks to prevent something like this happening. And you go through the details. That's fascinating. So originally the trade was meant to be $58,000,000 and it went through as you say forty $444 billion. And then various systems did catch some of that and effectively where it left city was they were trying to place something like 170 billion of erroneous orders over the course of a day. And then and effectively about 1.4 billion of that actually went through into the market before they were able to catch it. And and you know, presumably the trader very panicked, reversed you know, or cancelled the orders. But that's effectively what the FCA is saying is, you know, look, City, obviously, you know, they're not necessarily pinning the blame on the fat finger. It's more like how on earth did you let this go through? Because there's all sorts of like warnings. There were soft blocks as they're known. And it looks like, you know, City have come out and said, look we've, we've adjusted our control system, but it's pretty crazy, something like, so it's the it's the system rather than the the individual. How did you get past all these firewalls essentially that should have been in place? No, exactly what I mean how big are these fines in, in context Tom, you know £62 million seems like rather a lot of money, but is it. No, no, I think certainly in the context of AUK only, fine, it is pretty hefty. They have been higher. But but yeah, this will be in the sort of top tier which I think goes to show, you know this kind of stuff is just how closely the FCA and PRA are looking at it. And this is after a 30% discount because Citi obviously cooperated and and you know have obviously made significant changes here. But no, it's one of those ones where you know the fun here is really in the detail. So you know it's you kind of the kind of the I recommend everyone actually go read an FCA notice for once because it really takes you into like just what a crazy scenario happened just how much had to go wrong for this to happen and then how they sort of piece the pieces back together. That's going to be my Friday night reading then this FCA, this FCA report it will not send you to beds. That's not good. That's the read the read of the week. Tom how I mean is this just a problem, this is a systems problem for city that's been flagged by regulators. How much confidence should we have that other banks within this space, other players in this space have the systems in place to kind of prevent this kind of thing from happening or is this kind of an inevitability in a very fast moving, high pressured world of, of trading? Yeah, look, there's two ways of looking at it, right? There is sort of so many trades put on everyday. Millions, right. And and off, you know, very rarely does it reach this scale. And I think he speaks to all the banking executives. This is why they spend so much money on these systems because they want to be sort of completely sort of safeguarded against it. It's possible. But yeah, no, I would not say this is the last type error we'll see. Maybe it won't be next one won't be quite as big. I mean 1.4 billion of you know we really saw the European markets sort of slump on this and of course it comes at we came in an interesting time, right. The banks are still coming out of COVID work from home. So you know they're under a slightly different system of controls etcetera and and whether that sort of been sort of they've moved on from that system, I certainly think after this report they'll they'll be looking again and making sure they they haven't got any gaps in their their protocols. Yeah indeed plenty to watch out for there as well. Tom Metcalf, thank you very much for joining us. Our Managing Editor for EMEA Finance and Investing, Tom Metcalf. OK, there's a plenty more coming up. We just look at these European markets.

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