CFTC slaps Citibank with $1m fine for violating swap dealer regulation

The Commodity Futures Trading Commission (CFTC) has imposed a $1m fine on Citibank and Citigroup Global Markets for failing to comply with certain swap dealer requirements.

Citi was punished for not complying with the requirements to report Legal Entity Identifier (LEI) information to a swap data repository (SDR) alongside other related supervision failures.

The order also charges Citi for breaking the cease-and-desist provision from a 2017 CFTC order linked to reporting and supervisory failures.

Back in 2017, the CFTC entered an order than discovered Citi failed to report LEI data for swap transactions correctly to an SDR and failed to establish the electronic systems and procedures necessary to do so. Citi was also found to have failed to correct errors in LEI data previously reporting to an SDR and failed to perform its supervisory duties diligently with respect to LEI swap data reporting.

These findings led to the CFTC ordering Citi to pay a $550,000 civil monetary penalty and mandated Citi to cease and desist violating CFTC regulations as charged.

Today’s order found that between 2013 and November 2019, Citi misreported LEIs for specific swaps that it reporting through a third-party reporting service provider by reporting the counterparty as ‘Name Withheld’ instead a reporting a valid LEI or a Privacy Law Identifier compliant with available CFTC no-action relief.

These failures, according to the order, were due in part to Citi failing to supervise the reporting service provider diligently and in part to Citi taking over a year and a half to complete upgrades to its internal systems required for it to properly reporting counterparty identifier information through the reporting service provider.

Until at least September 2020, Citi was also found to have failed to satisfy the backloading conditions of the available CFTC no-action relief by failing to backload LEIs for live trades to an SDR within the 30-day period of the expiration of the no-action relief as well as failing to backload LEIs for expired or terminated trades entirely.

CFTC acting director of enforcement Vincent McGonagle said, “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.”

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