The Financial Services Agency on Friday ordered Citigroup Inc.’s securities unit in the country to improve its supervision of operations after failing to detect a manipulative trading practice by a bond trader.
The agency said Citigroup Global Markets Japan Inc. overlooked and executed fake trading orders, known as spoofing, for Japanese government bond futures on the Osaka exchange in late October last year, placed by a trader at Citigroup Global Markets Ltd., the British securities subsidiary of Citigroup.
Spoofing is a practice in which traders attempt to manipulate the prices of publicly traded financial assets by placing large buy or sell orders with no intention of executing them.
The agency urged the Japanese unit to compile a plan to improve management and internal control, and also present preventive measures by July 5. It imposed a fine of ¥130 million ($1.1 million) on Citigroup Global Markets.
“Citi will continue to enhance governance and internal controls and to develop and implement preventive measures to ensure that the issues identified by the regulators will not occur again,” Citigroup Global Markets Japan said in a statement.