Citigroup to pay $12 million settlement for misleading dark pool users
17 Sep 2018

The US Securities and Exchange Commission (SEC) has fined Citigroup Global Markets for misleading users of a dark pool operated by one of its affiliates.

According to the SEC, Citigroup misled users with assurances that high-frequency traders were not allowed to trade in Citi Match, a premium-priced dark pool operated by Citi Order Routing and Execution (CORE), when two of Citi Match’s most active users reasonably qualified as high-frequency traders and executed more than $9 billion of orders through the pool.

Citigroup will pay disgorgement and prejudgment interest totalling $5,437,475 and a penalty of $6.5 million. CORE will pay a penalty of $1 million.

The SEC also found that Citigroup failed to disclose that over a period of more than two years, close to half of Citi Match orders were routed to and executed in other trading venues, including other dark pools and exchanges, that did not offer the same premium features as Citi Match.

“Market participants deserve to make informed decisions about where they execute their orders,” said Joseph G. Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit.

“All trading venues, regardless of their trade volume, must ensure that their users have accurate information, particularly about key issues like order routing.”

A Citigroup spokesman reportedly said the matter has been resolved.

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