Date
19 November 2017
Goldman Sachs has agreed to pay a fine and settle a case over pricing rule violations in its dark pool. Photo: Bloomberg
Goldman Sachs has agreed to pay a fine and settle a case over pricing rule violations in its dark pool. Photo: Bloomberg

Goldman Sachs fined for dark pool rule violations

Goldman Sachs has been fined US$800,000 for failing to ensure that trades executed in the bank’s Sigma-X “dark pool” met US laws protecting investors’ right to best market prices, Financial Times reported Tuesday.

The Financial Industry Regulatory Authority (FINRA), Wall Street’s regulator, has found that from July 29 to August 9 2011 there were more than 395,000 transactions through Sigma-X where the execution came at an inferior price to the national best bid and offer, the paper said.

US regulations require that dark pools and public exchanges give investors the best price available, regardless of where trades are executed so that brokers do not “trade through” that best price at the venue of their choosing.

The Securities and Exchange Commission in June raised concerns about transparency in dark pools. Since the 2010 Flash Crash, attention had focused on the way equities were traded, but the publication of Michael Lewis’s Flash Boys earlier this year intensified the scrutiny, FT noted.

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