Germany's financial watchdog said today it was looking into recent trading by US financial services group Citigroup in European government bond and derivative markets but had not started a formal investigation.
A spokeswoman for BaFin, the Federal Financial Services Supervisory Authority, said it had been contacted by the MTS electronic trading platform about Citigroup's sale of around €11 billion worth of euro-denominated government debt in the space of minutes on August 2nd.
"We have no formal investigation so far. MTS contacted us and we will look at the matter but we haven't launched a formal investigation," the BaFin spokeswoman said.
Britain's financial watchdog, the Financial Services Authority (FSA) said yesterday it had launched an investigation into unusual trading by Citigroup.
A source familiar with the trades said they involved 100 European government bonds, with a variety of maturities, in 11 markets off 13 different platforms, 11 of which were on the electronic trading platform MTS.
Traders at rival banks said Citigroup sold the securities in a short space of time, causing them to fall in value, and bought many back soon afterwards to make a profit, which they estimated at anywhere from €10 million to €30 million.
Citigroup has said it will co-operate fully with the enquiry but has declined to comment further.