Curriculum·R404 Execution and Trade Craft·about 33 min
Order types on derivative venues
By the end of this lesson you can
- →Classify the order types and flags by what each one bounds: price, time, or position
- →Explain why reduce-only is the single most valuable flag on a derivative venue
- →Compute the cost of an unintended position and the saving from maker pricing
- →Distinguish a hard block from a warning, and configure the ones you control
Senior · enrolled learners
This lesson opens with The Citigroup basket order, 2 May 2022.
- What happened
- A London-based Citigroup trader intended to sell a basket of equities worth about $58M and instead created a basket valued at about $444B. The firm's internal controls blocked roughly $255B of it. The remaining $189B was passed to a trading algorithm that began slicing it for sale across the session. About $1.4B was actually executed across European exchanges before the trader canceled the order, coinciding with a material short-term drop in some European indices that lasted a few minutes. In May 2024 UK regulators fined Citigroup Global Markets £61.6M, about $79M, comprising £27.8M from the Financial Conduct Authority and £33.9M from the Prudential Regulation Authority. The PRA stated that deficiencies in the firm's trading controls contributed to the incident, specifically the absence of certain preventive hard blocks and the inappropriate calibration of other controls.
- The decision point
- The error was a factor of about 7,655 on the intended size and it was caught by three things in sequence: a control that blocked 57 percent of it, an algorithm that spread the rest over time rather than sending it at once, and a human who noticed and canceled. Only the first of those is a control. The regulator's finding names the shape precisely, which is that hard blocks prevent and calibrated warnings only inform, and the difference between the two is what actually reached the market.
- Recorded loss
- $78,400,000
What you will be able to answer
- →What does each order type bound?
- →Why is reduce-only the most valuable flag?
- →What does an extra digit cost?
- →What does post-only save?
Orientation and Year One are open: anyone can read them without an account. From Year Two onward the lessons are for enrolled learners, because progress through the later years only means anything if it is tracked against a record.
It is free. We do not sell the list and there is nothing to buy at the end of it.
Sources and review
- https://www.bankofengland.co.uk/news/2024/may/pra-fines-citygroup-global-markets-limited
- https://www.bloomberg.com/news/articles/2024-05-22/citigroup-fined-61-6-million-over-fat-finger-trading-blunder
- https://www.bankingdive.com/news/citi-flash-crash-78-million-penalty-british-fca-pra-manual-error-2022/716810/
- https://www.sec.gov/files/marketevents-report.pdf
Confidence high·Volatility medium·Reviewed 2026-08-07·Owner unassigned
Contested
Reported figures for the Citigroup basket differ in presentation, with the intended trade around $58M, the created basket around $444B, roughly $255B blocked, roughly $189B released to the algorithm and about $1.4B executed. The fine is reported as £61.6M and as $78.4M or $79M depending on the conversion date. None of the variation affects the argument.
Order type names, flag availability and fee schedules vary by venue and change frequently. Reduce-only, post-only and the time-in-force options described here are common rather than universal. Read the venue's order documentation rather than assuming this set.
R403-06 owns the distinction between an alert and a circuit breaker at the level of risk policy. This lesson applies it to individual orders. R411-05 applies it inside an automated system. Keep both splits.