Citi fined $25 million for spoofing US treasury futures

Citi caught spoofing orders in US treasury and swaps markets after CME inquired about suspicious trades.

Citigroup’s global markets business has been handed a $25 million fine for spoofing US treasury futures markets and failing to supervise the employees involved with the activity.

The US Commodity Futures Trading Commission (CFTC) found the spoofing took place between July 2011 and December 2012.

Spoofing is when a trader bids or offers with the intent to cancel the bid or offer before it is executed.

The CFTC found Citi had failed to provide sufficient training about spoofing to traders on its US treasury and US swaps desks.

“In fact, for most of the traders through which Citigroup spoofed, the only communication they received about spoofing before or during the relevant period consisted of a single compliance alert containing the Act’s anti-spoofing language,” the CFTC said.

Citi also failed to have adequate systems in place to detect spoofing activity, although self-reported the issue after CME inquired about suspicious trades.

In November last year, the Financial Industry Regulatory Authority (FINRA) sought the authority to stamp out spoofing and layering on US markets more quickly.

A regulatory filing to the Securities and Exchange Commission (SEC) revealed FINRA’s unease at the time it takes the authority to stop market manipulation behaviour.

FINRA explained the current process - which involves an in-depth investigation into the alleged activity - can often take several years to complete.