Citadel Securities Pays $97m to Settle with China Regulators
- In 2015, Citadel Securities saw one of its accounts, managed by a Shanghai-based futures firm, barred from trading shares
Citadel Securities, one of the largest market makers in US stocks and options, has agreed to pay 670 million yuan ($97 million) to resolve a probe by China’s regulator into alleged trading rules violations. The Chinese securities regulator launched the five-year investigation in 2015 following a stock plunge that erased nearly $3.9 billion in the mainland metal market.
The move comes after the China Securities Regulatory Commission pledged to strictly punish local institutional investors, who were charged with short selling, rumor-mongering, and foreign meddling for fueling the stock slide. Each respective fine was “based on differing circumstances, such as the amount of money made through the suspected illegal acts,” said the regulator.
In 2015, Citadel Securities saw one of its accounts, managed by a Shanghai-based futures trading firm, barred from trading shares by securities regulators. Citadel Securities was the first foreign broker to be caught up in Beijing's crackdown that barred 24 other accounts from the mainland's two major stock exchanges.
China moves to open up the financial sector
Short selling – which allows investors to make gains in a falling market by borrowing a security they don’t own, selling it and agreeing to buy it back at a lower price – plays a vital role in developed capital markets since it makes price discovery more efficient and smooths Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term whilst providing investors with a host of Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term tools.
Chinese regulator, however, didn’t ban the practice entirely, but after the scrutiny, investors can’t sell and then buy shares back the same day. Instead, they must now wait after completion of a short sale transaction until at least the next day to repurchase.
The attack against the so-called “malicious” short-selling was part of a wider crackdown on automated trading of stocks and futures, which was blamed for alleged trading irregularities during the 2015 rout.
Zia Ahmed, a spokesperson for Citadel Securities, said: “Citadel Securities has worked closely with the CSRC through the reconciliation process to reach this agreement. Constructive resolution of this matter was important to Citadel Securities as China continues to expand opportunities for foreign participation in its financial markets.”
The settlement comes as new Chinese regulations that lift investment caps and allow foreign banks’ majority control of their mainland business have come to effect on January 1, 2020.
China has pledged to open its $40 trillion financial markets, including allowing foreign firms to own as much as 51 percent of their securities ventures, up from the current 49 percent ceiling.
Citadel Securities, one of the largest market makers in US stocks and options, has agreed to pay 670 million yuan ($97 million) to resolve a probe by China’s regulator into alleged trading rules violations. The Chinese securities regulator launched the five-year investigation in 2015 following a stock plunge that erased nearly $3.9 billion in the mainland metal market.
The move comes after the China Securities Regulatory Commission pledged to strictly punish local institutional investors, who were charged with short selling, rumor-mongering, and foreign meddling for fueling the stock slide. Each respective fine was “based on differing circumstances, such as the amount of money made through the suspected illegal acts,” said the regulator.
In 2015, Citadel Securities saw one of its accounts, managed by a Shanghai-based futures trading firm, barred from trading shares by securities regulators. Citadel Securities was the first foreign broker to be caught up in Beijing's crackdown that barred 24 other accounts from the mainland's two major stock exchanges.
China moves to open up the financial sector
Short selling – which allows investors to make gains in a falling market by borrowing a security they don’t own, selling it and agreeing to buy it back at a lower price – plays a vital role in developed capital markets since it makes price discovery more efficient and smooths Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term whilst providing investors with a host of Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term tools.
Chinese regulator, however, didn’t ban the practice entirely, but after the scrutiny, investors can’t sell and then buy shares back the same day. Instead, they must now wait after completion of a short sale transaction until at least the next day to repurchase.
The attack against the so-called “malicious” short-selling was part of a wider crackdown on automated trading of stocks and futures, which was blamed for alleged trading irregularities during the 2015 rout.
Zia Ahmed, a spokesperson for Citadel Securities, said: “Citadel Securities has worked closely with the CSRC through the reconciliation process to reach this agreement. Constructive resolution of this matter was important to Citadel Securities as China continues to expand opportunities for foreign participation in its financial markets.”
The settlement comes as new Chinese regulations that lift investment caps and allow foreign banks’ majority control of their mainland business have come to effect on January 1, 2020.
China has pledged to open its $40 trillion financial markets, including allowing foreign firms to own as much as 51 percent of their securities ventures, up from the current 49 percent ceiling.