Citigroup will pay $525,000 over CFTC wheat speculation claims

Trades used to hedge OTC positions

Wheat Wheat

Citigroup Inc. will pay $525,000 to resolve U.S. regulatory claims that the Wall Street bank’s traders exceeded limits on speculation in wheat futures.

Traders with Citigroup units in December 2009 held bullish positions on the Chicago Board of Trade that exceeded so-called position limits intended to curb excessive speculation, the Commodity Futures Trading Commission said in an order released today. The trades were used to hedge customers’ transactions in the over-the-counter swap market, the agency said.

“We are pleased to resolve this matter and look forward to putting this behind us,” Scott Helfman, a Citigroup spokesman, said in an e-mail statement. The trades were conducted at subsidiaries including Citigroup Global Markets Limited, a London-based investment banking arm.

New curbs on oil, natural gas, wheat and other trades imposed under the Dodd-Frank Act begin to take effect on Oct. 12. The International Swaps and Derivatives Association Inc. and Securities Industry and Financial Markets Association filed a lawsuit in December seeking to overturn the limits, arguing that the agency didn’t demonstrate that they were required by the 2010 financial-regulation law.

Bloomberg News

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