The German and French financial watchdogs said on Thursday they were looking into recent trading by U.S. financial services group Citigroup in European government bond and derivative markets.
But Germany's BaFin, the Federal Financial Services Supervisory Authority, said it had not started a formal probe while France's AMF regulator declined to comment on the possibility of doing so.
Britain's financial watchdog, the Financial Services Authority (FSA) said on Wednesday it had launched a probe into unusual trading by Citigroup.
A spokeswoman for BaFin said it had been contacted by the MTS electronic trading platform about Citigroup's sale of around 11 billion euros ($13.5 billion) worth of euro-denominated government debt in the space of minutes on August 2.
"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.
"The AMF is conducting a first analysis into interventions concerning the French market but refuses any comment on any possible opening of an investigation," a spokeswoman for AMF said.
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 euros.
Citigroup has said it will cooperate fully with the British enquiry but has declined to comment further.
The FSA said the probe may lead to formal disciplinary proceedings under the Financial Services & Markets Act 2000.
