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ECB drops Citi from FX contact group

A pedestrian passes a logo of Citigroup in Tokyo
The European Central Bank has dropped Citigroup from its experts’ working group on foreign exchange, days after the U.S. bank was fined by U.S. and UK regulators for failing to stop traders from trying to manipulate the currency market.

A source familiar with the matter said the ECB’s decision seemed to be related to the fine.

The ECB declined to comment on this aspect, saying only that the change in the list of members was part of an ongoing annual review of the foreign exchange contact group.

A spokesman for Citi in London declined to comment

Citi, the world’s biggest foreign exchange bank, was one of six banks fined a total of $4.3 billion last week for failing to have adequate systems in controls in place to prevent traders from attempting to rig benchmark currency rates.

The ECB has several working groups that consist of experts from the ECB and commercial banks through which it keeps in touch with the debt, FX and money markets to discuss developments and to monitor and exchange views.

In its latest participants’ list for its foreign exchange contact group dated November 2014, the Citigroup member has been dropped.

None of the other five banks fined last week is in the group.

Citi’s fines last week totaled $1.018 billion, made up of $358 million to Britain’s Financial Conduct Authority (FCA), $310 million to the U.S. Commodity Futures Trading Commission (CFTC) and $350 million to the U.S. Office of the Comptroller of the Currency (OCC).

Citi was fined the most of the six banks, just outstripping the $1.012 billion levied on JP Morgan .

Authorities accused dealers of sharing confidential information about client orders and coordinating trades to boost their own profits. The foreign exchange benchmark they allegedly manipulated is used by asset managers and corporate treasurers to value their holdings.

In its final notice on Citi, the FCA highlighted an attempt by the bank to manipulate the ECB fixing on euro/dollar on one particular day by pushing the rate higher.

The sharing of order information and trading strategies between a Citi trader and counterparts at four other banks in an electronic chatroom that day resulted in the euro moving higher and a profit for Citi of $99, 000.

The other traders described Citi’s performance as “impressive”, “lovely” and “cnt teach that” (sic), according to transcripts released by the FCA.



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