(by Ameli Berksman)

The UK’s Financial Services Authority commenced a formal investigation into possible regulatory violations of Citigroup since its controversial trading activities in the eurozone government bond market. The results of it can probably lead to a fine or a warning.

The point is that Citigroup has sold €11 billion of securities in less than two minutes, and then bought back €4 billion at a lower price soon after, thus forcing platform operator EuroMTS bound the amount of bonds a bank could sell within two minutes.

Its step forced rival dealers to accuse the US bank of market manipulation and call for sanctions. Moreover, some of them withdrew price quotes from EuroMTS in protest at Citigroup’s moves.
“We will, of course, co-operate fully as with any regulatory inquiry. Beyond that, it is not appropriate for us to comment,” Citigroup stated.

“We will continue to co-operate with the FSA and all relevant European regulators in relation to the large transactions executed across a number of markets managed by the MTS Group,” said EuroMTS.