Citigroup Global Markets

Citigroup Global Markets was censured and fined $175,000 for failing to maintain written policies and procedures reasonably designed to prevent trade-throughs of protected quotations in NMS stocks that resulted from outdated quotation data.

The findings stated that while the firm’s WSPs identified the need to avoid using outdated quotation data, it failed to provide for periodic reviews that may have detected the data problems and did not contain any process for retaining firm-specific quotation data sufficient to demonstrate the reasonableness of its Rule 611 compliance program.

In addition, the firm failed to detect that one of its trading desks had improperly configured a third-party market data feed, which caused it to rely upon an inaccurate National Best Bid or Offer (NBBO) when trading certain securities.

The firm also failed to establish, maintain and enforce written policies and procedures reasonably designed to assure compliance with the terms of the outbound intermarket sweep order (ISO) exception and failed to take reasonable steps to ensure that its ISOs satisfied Regulation NMS.

In addition, the firm failed to update its WSPs and supervisory processes when it began using a third-party system to facilitate compliance with the outbound ISO exception. Notably, the firm had no process to monitor whether its internal trading system was properly interpreting instructions from the third-party system that would have prevented trade-throughs.

The firm also failed to establish, maintain and enforce policies and procedures reasonably designed to assure compliance with the benchmark exception for American Depository Receipts (ADR). Specifically, the firm did not have any process to reasonably document the estimated conversion fee included in the ADR equivalent price.