July 21 Volume in Barclays Plc's private U.S.
trading venue, or "dark pool," fell 79 percent in the week and a
half after the New York attorney general accused the British
bank of giving an unfair edge to high-speed traders, according
to data released on Monday.
The number of shares traded in Barclays' LX, an
alternative trading system, dropped 66.3 percent in the week of
June 30 to around 66.4 million shares from around 197 million
shares the previous week, according to a report by the Financial
Industry Regulatory Authority. The report from FINRA, Wall
Street's self-funded regulator, included only the most widely
The drop followed a 37 percent decline in the week the probe
Dark pools are broker-run trading venues where investors
trade shares anonymously and trading data is only made available
afterward, reducing the chance of information leaking about
large orders. The lack of transparency has drawn the scrutiny of
New York Attorney General Eric Schneiderman said on June 25
that he had evidence that Barclays' staff had falsified
marketing materials and misled big institutional clients in an
effort to expand its dark pool and increase revenues. He accused
the British bank of giving an edge to brokers and proprietary
trading firms that use aggressive high-frequency trading
strategies while telling other clients it was protecting them
from such tactics.
Deutsche Bank, Credit Suisse, Royal
Bank of Canada and Investment Technology Group
were among several brokers and banks that said they had stopped
routing orders to Barclays' dark pool after the securities fraud
lawsuit was filed.
For the week of June 30, Barclays' dark pool was the
twelfth-largest in the United States, down from the
second-largest two weeks earlier.
Dark pools run by Credit Suisse, UBS, Bank of
America's Merrill Lynch, Deutsche Bank, Morgan Stanley
, Goldman Sachs, JPMorgan, KCG,
Citigroup, IEX, and ITG had more volume.
In early June, dark pool operator Liquidnet paid $2 million
to the U.S. Securities and Exchange Commission to settle charges
that the electronic trading network had improperly used its
subscribers' confidential trading information to market its
services. On July 1, Goldman Sachs agreed to pay
an $800,000 fine to FINRA to settle a case over pricing rule
violations in its dark pool.
(Reporting by John McCrank in New York; Editing by Dan Grebler)