The Hong Kong Securities and Futures Commission (SFC) has just announced that it has reprimanded and fined Citigroup Global Markets Asia Limited (CGMAL) $4 million over CGMAL’s regulatory breaches in relation to the operations of its alternative liquidity pool (ALP).
The disciplinary action followed an SFC investigation on CGMAL, which found that the operations of Citi Match, the ALP of CGMAL, failed to comply with the relevant requirements from December 2015 to August 2016 as set out in the Code of Conduct.
CGMAL was expected to operate Citi Match with due skill, care and diligence, and required to:
- provide the ALP Guidelines to users to ensure that they are fully informed on how the ALP operates; and
- ensure that only qualified investors are permitted to be users of the ALP.
However, due to an incorrect system setting of client profiles, over 130 clients had accessed Citi Match without being assessed whether they were qualified investors. CGMAL also failed to provide the clients with the ALP Guidelines prior to routing their first orders to Citi Match.
In reaching the resolution, the SFC took into account all relevant circumstances, including that CGMAL:
- took remedial actions to rectify the situation shortly after identifying the incorrect system setting and subsequently implemented enhanced measures to ensure compliance; and
- took the initiative to bring this matter to a conclusion by cooperating with the SFC to resolve the regulatory concerns.