Citigroup Global Markets Asia (CGMAL), the securities unit of US bank Citigroup, has been fined HK$4m ($509,620) by Hong Kong’s Securities and Futures Commission (SFC) for flouting alternative liquidity pool (ALP) or dark pool regulations between December 2015 and August 2016.
The fine followed a probe that revealed that Citi Match, the dark pool operated by the Citi unit, failed to meet necessary requirements.
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The rules mandate the firm to inform users on the ALP’s operations and to ensure that only qualified investors use the ALP.
SFC alleged that CGMAL permitted more than 130 clients to tap the dark pool without evaluating whether they were qualified investors. The firm was also accused of failing to offer ALP guidelines to clients.
The instance was the result of an incorrect system setting of client profiles, the regulator said.
In reaching the settlement, the watchdog considered CGMAL’s cooperation in the matter and remedial measures taken.
Commenting on the failures, the bank said: “Citi would like to confirm that there was no financial impact on affected clients, who were all qualified investors, and no client opted-out of Citi Match after being specifically provided with the ALP guidelines, which were available at all relevant times on Citi’s website.”
