Citigroup takes responsibility for ‘flash crash’ Business

Citigroup admitted its London trading desk was behind a “flash crash” that sent shares tumbling across Europe on Monday.

The Wall Street giant said one of its traders made a mistake by ‘entering a trade’ which sparked a sharp sell-off in Swedish shares, wiping out up to 300bn euros (£251bn ) in a few minutes.

The bank said it identified the error “within minutes” and fixed it, but the mistake will be another blow to Citi, which has spent years trying to improve its financial controls.

Jane Fraser, the Scottish native who became the first woman to lead a Wall Street bank when she took office in September 2020, ordered thousands of staff to focus on improving risk systems and control of Citi.

A flash crash is an extremely sharp drop in asset prices and is often caused by a trading error.

Citi has a history of gaffes and in 2020 blamed human error on the fact that it wired nearly $900m (£719m) to a group of hedge funds instead of an interest payment less than $8 million.

A U.S. judge ruled the bank could not recover hundreds of millions of dollars mistakenly sent in what he called “a banking error of perhaps an unprecedented nature and scale.”

Citi is in talks with regulators and exchanges about Monday’s incident, Bloomberg reported.

On Monday, Nasdaq Stockholm said a single sell-side order was behind the sharp decline rather than a technical issue on its part.

A spokesperson said: “The reason for the decline was a sell event by a market participant. We have not identified any disruptions in the Nasdaq systems.

“Furthermore, after review, Nasdaq saw no reason to reverse trades made at this event.”

Sweden’s OMX Stockholm 30 index closed nearly 2% lower on Monday, roughly in line with a decline in European markets.

He had dropped as much as 8% in just five minutes before recovering most of the losses soon after.

Other stock markets, including those in Denmark, Norway, Germany, Italy and France, also crashed but then recovered.