* Credit Suisse CEO says "potential abuses" in the system
* CEO Dougan says Credit Suisse is working with regulators
* Credit Suisse has most active alternative trading system in U.S.
ZURICH, July 22 (Reuters) - Credit Suisse, one of the biggest players in "dark pools", is working with regulators to stamp out potential abuses in the alternative trading venue, the boss of the Swiss bank said on Tuesday.
Dark pools allow big blocks of shares to be traded anonymously without informing the market until completion to minimise the risk of the price moving to the disadvantage of an investor should the market get wind of the trade before it is executed. Some have been accused of giving unfair advantage to high-frequency traders.
Credit Suisse Chief Executive Brady Dougan said there was a growing level of inquiry from regulators as part of efforts to stamp out possible exploitation.
"Certainly there are potential abuses in these systems, just like in any system," Dougan said after the bank swung to a second-quarter net loss earlier on Tuesday on a 1.6 billion Swiss franc ($1.77 billion) fine for helping wealthy American tax dodgers.
"We've worked hard to try to make sure that we can eliminate the potential for abuse and we've worked closely with the regulators as well as our clients to try to do that."
Regulators are taking a closer look at those run by big global banks, and new rules in Europe that aim to make markets more transparent are set to dampen trading in the private share-trading venues that promise anonymity for specialist investors.
New York's attorney general filed a lawsuit against Barclays last month, accusing it of giving an unfair edge in the United States to high-frequency traders, while claiming to be protecting other clients from them.
Barclays' dark pool, known as LX, is the second most active alternative trading system in the United States after Credit Suisse's, according to regulatory data.
Dark pool trading contributes around $30 million in revenue to Credit Suisse on an annualised basis, Dougan said, less than 1 percent of the bank's total trading revenue.
However, given Credit Suisse's significant role in dark pool trading shares in the Zurich-based bank fell 3.6 percent on the first day of trading after the Barclays lawsuit was filed.
Other banks with big dark pools include UBS, Bank of America, Morgan Stanley, Deutsche Bank and Goldman Sachs
Barclays has hired external lawyers to help it investigate the allegations, including Matthew Martens, formerly chief litigator at the U.S. Securities and Exchange Commission. The British bank has until around July 25 to decide whether or not to fight the charges.
Volume in Barclays' dark pool electronic trading venue has slumped by 79 percent in the week and a half after New York Attorney General Eric Schneiderman filed a lawsuit against the bank, data showed on Monday.
Dougan said Credit Suisse had yet to see any particular change in the transaction volume or flow in this area but there could well be in the future, the potential drivers being customer demand and new regulation. ($1 = 0.9021 Swiss Francs) (Reporting by Joshua Franklin; Additional reporting by Carmel Crimmins in Dublin, editing by David Evans)