Germany's financial regulator, BaFin, has imposed a fine of nearly €13 million on Citigroup Global Markets Europe AG for lapses in its trading system controls.

The penalty, announced on Thursday, is related to a major trading error that occurred in May 2022, which caused substantial market disruption across European stock exchanges.

The incident, commonly referred to as a "fat-finger" error, involved a Citigroup trader in London mistakenly processing a $444 billion order instead of the intended $58 million. This blunder resulted in $1.4 billion worth of erroneous sell orders, triggering a brief but intense selloff in European markets. The OMX Stockholm 30 Index was particularly affected, with the error temporarily wiping out €300 billion in market value across various European bourses.

BaFin stated that Citigroup "failed to ensure that erroneous orders were not transmitted" and emphasised that such mistakes can "trigger or at least contribute to market disruption". The regulator noted that while Citigroup had outsourced its oversight of algorithmic trading to its London office, the Frankfurt division remained responsible for the system's appropriate setup.

This fine follows a separate penalty imposed by UK regulators last month, where Citigroup was ordered to pay £61.6 million for the same incident. The UK's Financial Conduct Authority levied a £27.77 million fine, while the Prudential Regulatory Authority imposed an additional £33.88 million penalty.

Responding to the German fine, Citigroup stated, "We are pleased to resolve this matter from more than two years ago, which arose from an individual error that was identified and corrected within minutes". The bank added that it had "immediately taken steps to strengthen our systems and controls" and remains "committed to ensuring full regulatory compliance".

The incident and subsequent fines highlight the critical importance of robust trading systems and controls in the fast-paced world of global finance, where a single error can have far-reaching consequences across international markets.

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