Citigroup Global Markets Limited · Governance finding · severity 3 of 5
On 19 August 2022 the FCA fined Citigroup Global Markets Limited (CGML), Citigroup's London broker-dealer, £12,553,800 for failing to properly implement the Market Abuse Regulation's trade-surveillance requirements. Per the Final Notice, CGML did not identify significant gaps in its trade surveillance until January 2018, 18 months after MAR took effect, so it could not effectively monitor its trading for certain types of insider dealing and market manipulation. Its January 2018 gap analysis found 35 gaps among 74 second-tier market-abuse risks. Analysts reviewed alerts from an automated trade surveillance system, and the FCA notes manual surveillance would not suit a firm of CGML's size. CGML settled with a 30% discount and remediated the most significant gaps in 2018. The system was automated and not described as AI.
Record last reviewed Oct 21, 2026 · Markdown
Date
Institution
Country
United Kingdom
AI system
Automated trade surveillance system developed by CGML with vendor support, generating alerts for analyst review; not described as AI
AI?
Automated system not described as AI
The system was automated, but neither the institution nor a regulator described it as AI; it is listed because it is routinely discussed as an AI failure.
Category
Status
Settled
Severity
3 of 5
Impact
£12,553,800 FCA fine (£17,934,030 before the 30% settlement discount) · Significant gaps in surveillance for insider dealing and market manipulation across equities, rates, commodities and other asset classes between July 2016 and January 2018; the Final Notice does not identify customer losses or specific abuse that went undetected.
What happened?
The Market Abuse Regulation (MAR) took effect on 3 July 2016 and requires firms that arrange or execute trades to monitor both orders and transactions to detect and report potential market abuse. Per the FCA's Final Notice, CGML's EMEA Surveillance team, based mainly in Belfast, "reviewed alerts generated by CGML's automated trade surveillance system, which had been developed by CGML, with support from a vendor", and enhancements to that system followed a software development process with a lead time of about 12 months.[1]
The FCA found that CGML implemented MAR without first considering its supplementing regulations, did not complete its initial gap analysis until October 2017, and did not begin an Article 16(2) risk assessment until December 2017. Its UK risk committee and board were wrongly told in late 2016 that MAR implementation was complete. CGML told the FCA in late November 2017 that its implementation was incomplete.[1][2]
A risk assessment in December 2017 and January 2018 "identified significant gaps in CGML's trade surveillance coverage". Across 23 behaviours and 39 products in six asset classes, it found 35 gaps among 74 Tier 2 risks (52.7% fully or partially covered), 87 gaps among 148 Tier 3 risks and 243 among 298 Tier 4 risks. The FCA noted that EMEA Surveillance acknowledged manual surveillance would not be suitable for a firm of CGML's size, because MAR requires monitoring of all orders and transactions.[1]
When did it happen?
- Jul 3, 2016
The Market Abuse Regulation takes effect, requiring surveillance of orders as well as trades.[1]
- Nov 2017
CGML tells the FCA that its analysis of trade-surveillance gaps is incomplete.[1]
- Jan 2018
CGML's gap analysis identifies significant surveillance gaps; a remediation programme begins and the most significant gaps are fixed by the end of 2018.[1]
- Aug 19, 2022
The FCA fines CGML £12,553,800 after a 30% settlement discount for breaches of Principle 2 and Article 16(2) of MAR.[1][2][3]
What was the impact?
- Financial: £12,553,800 FCA fine (£17,934,030 before the 30% settlement discount)[1][2]
- Other: Significant gaps in surveillance for insider dealing and market manipulation across equities, rates, commodities and other asset classes between July 2016 and January 2018; the Final Notice does not identify customer losses or specific abuse that went undetected.[1][2]
Severity 3 of 5: A regulatory finding with a £12,553,800 fine after settlement, for trade-surveillance gaps that persisted from July 2016 to January 2018; the Final Notice identifies no customer losses or specific undetected market abuse.
How did Citigroup Global Markets Limited respond?
Citi said it was pleased to put the matter behind it, Reuters reported. CGML agreed to resolve the case under the FCA's executive settlement procedures and qualified for a 30% discount.[1][3]
What was the outcome, and did regulators act?
CGML settled and paid £12,553,800 for breaching Principle 2 (due skill, care and diligence) and Article 16(2) of MAR. Per the Final Notice, it began a remediation programme in January 2018 and all the most significant gaps were remediated by the end of that year.[1][2]
Why did the FCA fine Citigroup Global Markets in 2022?
The FCA fined CGML £12,553,800 in August 2022 because it failed to properly implement the Market Abuse Regulation's trade-surveillance requirements. Until January 2018 it had not identified significant gaps in its surveillance, leaving it unable to monitor effectively for certain insider dealing and market manipulation.
Was Citigroup's trade surveillance system AI?
No. The Final Notice describes an automated trade surveillance system, built by CGML with vendor support, that generated alerts for analysts to review. The failings were in how CGML assessed market-abuse risks and extended that system's coverage, and neither the FCA nor Citi described it as artificial intelligence.
Did the FCA find market abuse at Citigroup?
No. The case concerned gaps in surveillance coverage, not proven abuse. The Final Notice does not identify specific insider dealing or manipulation that went undetected, or any customer losses; the breach was of Principle 2 and of the Article 16(2) duty to detect and report potential abuse.
What did Citigroup change after the FCA case?
Per the Final Notice, CGML conducted a fresh risk assessment in December 2017 and January 2018, started a remediation programme in January 2018 and fixed all the most significant surveillance gaps by the end of 2018. Citi said it was pleased to put the matter behind it.
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