LONDON - UK regulators fined Citigroup 61.6 million pounds ($78.5 million) for controls failings in its trading operations, one of the biggest sanctions for systems breaches, which in one case saw the Wall Street firm cause a sharp fall in European stocks.

Problems at Citigroup Global Markets Limited (CGML) "crystallised into trading incidents" the Prudential Regulation Authority (PRA) said in a statement on Wednesday outlining the findings of its investigation.

The PRA and Financial Conduct Authority (FCA), the markets watchdog, both probed and fined Citigroup over the failings that spanned from April 2018 through May 2022.

"Firms involved in trading must have effective controls in place in order to manage the risks involved," said Sam Woods, CEO of the PRA and the Bank of England's deputy governor for prudential regulation. "CGML failed to meet the standards we expect in this area, resulting in today’s fine.

Citi on May 2, 2022 processed an erroneous $444 billion order that was meant to amount to just $58 million, prompting $1.4 billion in mistaken sell orders, according to the regulators' findings.

The PRA said the immediate cause of the trading error was a trader's mistake but "primary control failings" resulted in Citi's electronic trading system generating erroneous orders.

The regulator said that the mistake coincided "with a material short term movement" in several European indices before the trade was cancelled.

"In particular the absence of certain preventative hard blocks and the inappropriate calibration of other controls" were behind the blunder, it said.

Citi had received "repeated supervisory communication" from the PRA to improve but weaknesses persisted, the regulator said.

A Citi spokesperson said the bank was "pleased to resolve this matter from more than two years ago, which arose from an individual error that was identified and corrected within minutes."

"We immediately took steps to strengthen our systems and controls, and remain committed to ensuring full regulatory compliance," the spokesperson said via email. Under CEO Jane Fraser, Citi has been seeking to address longstanding and widespread deficiencies in its risk management, data governance and internal controls. The failings have prompted regulatory notices in the United States from the Federal Reserve and the Office of the Comptroller of the Currency.

The PRA fined Citi 33.9 million pounds for failings in its trading systems and controls, a penalty that was reduced by 30% after Citi agreed to resolve the issue.

The FCA said it fined Citi 27.8 million pounds.

($1 = 0.7849 pounds)

(Reporting by Tom Wilson Editing by Tommy Reggiori Wilkes, Lincoln Feast and Tomasz Janowski)