Citi fined $1 million for swap reporting violations

4 weeks ago 22

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Citibank, N.A. and Citigroup Global Markets Limited (collectively, Citi) have paid $1 million to settle charges filed by the Commodity Futures Trading Commission.

The two provisionally registered swap dealers have allegedly failed to comply with certain swap dealer requirements for reporting Legal Entity Identifier (LEI) information to a swap data repository (SDR) and related supervision failures.

The order also charged Citi for violating the cease and desist provision of a 2017 CFTC order relating to reporting and supervisory failures.

The $1 million civil monetary penalty on Citi reflects a reduction in recognition of Citi’s substantial cooperation with the Division of Enforcement’s investigation and proactive remediation, the CFTC explained in a statement.

“As this case demonstrates, the CFTC will vigorously pursue swap dealer registrants that fail to meet their reporting obligations and violate CFTC orders. Accurate swap data reporting is essential to fulfillment of the CFTC’s regulatory mandates, including monitoring systemic risk and preventing market abuse”, CFTC’s Acting Director of Enforcement Vincent McGonagle.

The original complaint against Citi dates back to September 2017, ordering to pay a $500,000 fine and stating the CFTC “found Citi failed to report LEI data for swap transactions correctly to an SDR; failed to establish the electronic systems and procedures necessary to do so; failed to correct errors in LEI data previously reported to an SDR, and failed to perform its supervisory duties diligently with respect to LEI swap data reporting”.

The CFTC found Citi in violation of the cease and desist provisions of the 2017 order: failing to report LEIs for swap transactions properly and failing to perform its supervisory duties diligently with respect to LEI swap data reporting.

The new charges go back to the period between 2013 to November 2019, where Citi misreported LEIs for certain swaps that it reported through a third-party reporting service provider by reporting the counterparty identifier as “Name Withheld,” rather than reporting a valid LEI or a Privacy Law Identifier compliant with available CFTC no-action relief.

These failures were due in part to Citi failing to supervise the reporting service provider diligently and in part to Citi taking over 18 months to complete upgrades to its internal systems needed for it to properly report counterparty identifier information through the reporting service provider, the order states.

Citi paid the $1 million fine and will be updating the CFTC on its remediation efforts in regard to its SDR corrected swap data.

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