Citigroup Global Markets Inc has agreed to pay a fine of $60,000 as a part of a settlement with Nasdaq Stock Market LLC.
During the period October 1, 2019, through June 30, 2020, Citi violated Nasdaq Rule 4613(a) for failing to satisfy its two-sided continuous quoting obligation.
During this period of time, the firm failed to maintain a continuous two-sided trading interest during regular market hours in 306 instances. Nearly all instances occurred because of a technical issue with the firm’s two-sided quoting engine, which paused trading for the first trade date following a corporate action that resulted in the creation of a new security identifier or changes to an existing one.
The remaining instances occurred due to a variety of other technical issues and because the firm erroneously classified one symbol as a restricted security. The conduct constitutes separate and distinct violations of Nasdaq Rule 4613(a)(l).
In addition, during the period January 1, 2021, through June 30, 2021, the firm violated Nasdaq Rule Equity 2, Section 5(a)(2) for submitting bid/offer interest outside of the Designated Percentage.
The T+ 1 report was unreasonably designed because a “bug” caused the report only to identify instances where the firm may not have been continuously quoting throughout the day, rather than for an entire day. Citi therefore had no system in place to identify instances when it was failing to quote for an entire day.
Finally, the firm did not have a procedure in place to monitor for compliance with its obligation to quote within designated percentages.
On top of the fine, the firm has agreed to a censure.
During FINRA’s investigation and prior to settlement, Citi amended its review process so that a supervisor received and reviewed an intraday report and a T+ 1 report to assess whether the firm was complying with two-sided quoting obligations.
