(Bloomberg) -- The U.K. investigation into the sudden plunge in the pound in October is focusing on Citigroup Inc.'s Japanese unit, the Financial Times reported.
While Citigroup traders aren't believed to have started the so-called flash crash on Oct. 7, its Tokyo trading desk played a key role in exacerbating it, the newspaper said, citing unidentified bankers and officials involved in the inquiry. One of the bank's traders placed multiple sell orders when the currency was slumping, the FT reported.
The pound suddenly tumbled as much as 6.1 percent during early Asian trading that day, according to data compiled by Bloomberg, to the lowest since March 1985. At the time, traders saw the possibility of human error, with algorithms adding to selling pressure at a time of day when liquidity is typically low. Others pointed to an FT article citing French President Francois Hollande as saying the U.K. must suffer the consequences of leaving the European Union.
Although the Bank of England has said that the currency's drop lacked a clear fundamental trigger, its investigation focused on a single incident, the FT reported, citing a person briefed on the probe.
Citigroup said in a statement that it managed the situation appropriately and its systems and controls functioned throughout the period, and it declined to say whether anyone had been disciplined or its trading practices had changed, the FT reported. A Hong Kong-based spokesman for the U.S. bank said he couldn't immediately respond to a Bloomberg request for comment on the article. The Bank of England declined to comment on the role of Citigroup or any other bank, the FT said.
To contact the reporter on this story: Russell Ward in Tokyo at rward16@bloomberg.net. To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Russell Ward, Paul Panckhurst
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