US regulators charged Citigroup with falsely leading users to believe high-frequency traders were not permitted on Citi Match, a premium-priced “dark pool” marketplace separate from the NY Stock Exchange and other public markets (Don EMMERT)

New York (AFP) – US securities regulators announced Friday that Citigroup would pay $12 million for misrepresenting practices on a private exchange to clients.

The Securities and Exchange Commission charged Citigroup with falsely leading users to believe high-frequency traders were not permitted on Citi Match, a premium-priced “dark pool,” a private marketplace separate from the New York Stock Exchange and other public markets.

In fact, two of Citi Match’s most active users were high-frequency traders and executed more than $9 billion in orders on the exchange, the SEC said.

Large investors like dark pools as a way of commissioning transactions without swaying prices and boosting the cost of their orders. But the venues have been criticized for lack of transparency.

The SEC also said Citigroup failed to disclose that trades were routed to other platforms, including other dark pools. 

Citigroup sent orders saying the orders had been executed on Citi Match when they had been put through on other venues, the agency said.

“Market participants deserve to make informed decisions about where they execute their orders,” said Joseph Sansone, head of the SEC’s enforcement group’s market abuse unit.

“All trading venues, regardless of their trade volume, must ensure that their users have accurate information, particularly about key issues like order routing.”

Citigroup did not admit or deny the charges but agreed to be censured as part of the settlement, the SEC said.

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