SFC hands out belated algo admonishment for 2009 Citi case

Hong Kong’s regulator, the Securities and Futures Commission, has given Citigroup a reprimand over the behaviour of an algorithm, that occurred in a previous iteration of its electronic product.

Hong Kong’s regulator, the Securities and Futures Commission (SFC) has given Citigroup a belated reprimand over the historical behaviour of its algorithms, in an event that that took place four years ago.

The regulator said that Citigroup had failed to ensure that certain securities orders executed through its algorithmic trading system between April 2009 and May 2010 would not cause undue price impact to the market.

The SFC’s investigations into Citigroup’s algorithmic trading to execute client orders on four occasions found that, “execution in those cases resulted in a material increase or decrease in the price of the relevant stocks within a very short period of time, before the stock prices returned quickly to their original levels.”

 A Citi spokesperson said today.”Citi co-operated fully with the SFC and we are pleased to have resolved this matter. As the SFC notes, the underlying events occurred in 2009/2010 and involved past generation algorithmic trading systems that are no longer in operation at Citi.”

Had similar problems occurred today, in the wake of Hong Kong’s electronic trading regulations that came into force at the beginning of this year, the SFC observed that the firm would be paying a heavy fine.