CFTC Fines Citigroup Over Swaps Reporting

By Gabriel T. Rubin Features Dow Jones Newswires

The Commodity Futures Trading Commission fined two Citigroup Inc. subsidiaries for failing to properly report swap transactions, the latest in a series of such penalties by the regulator.

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The CFTC ordered Citigroup to pay $550,000 for failing to report necessary identifying information for trades of swaps, which are bets on the direction of interest rates, commodities and other assets, and for not establishing the proper procedures for doing so, from at least April 2015 to December 2016.

Rather than identifying the counterparties for tens of thousands of swaps trades, Citigroup labeled the trades as "name withheld," the regulator said. The CFTC said that Citigroup's reporting errors "stemmed from a design flaw in its swap data reporting systems with respect to swap continuation data."

In a statement, Citigroup said it was "pleased to have resolved this matter." The CFTC said the bank cooperated with the investigation.

Last year, the CFTC fined several firms, including Deutsche Bank AG, J.P. Morgan Chase & Co. and Barclays PLC, over failures to report derivatives trades in a timely and accurate way. Firms have struggled with getting their technology to accurately and rapidly report swap trades.

Swap reporting is particularly challenging, relative to reporting stock or options trades, because before the 2010 Dodd-Frank regulatory overhaul law, derivatives prices hadn't been systematically tracked in real time.

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Dodd-Frank mandated reporting these complex trades to a central repository operated by regulators and private firms in an attempt to create real-time views of opaque parts of financial markets. The goal of the toughened reporting requirements was to prevent the uncertainty in derivatives markets that helped fuel the financial crisis.

Telis Demos contributed to this article.

Write to Gabriel T. Rubin at gabriel.rubin@wsj.com

(END) Dow Jones Newswires

September 25, 2017 14:24 ET (18:24 GMT)