Clients are pulling out of Barclays’ “dark pool” after a US lawsuit accused the British bank of misleading them about high frequency activity in its private trading venue, the Financial Times reported.
Barclays has fallen from second to 12th place in terms of volumes traded in US dark pools after news of the lawsuit emerged, the report said. The group now falls behind rivals such as UBS, Merrill Lynch, Deutsche Bank, Morgan Stanley, Goldman Sachs and JPMorgan.
Regulators and lawmakers are seeking to tighten scrutiny of dark pools, which allow investors to trade large blocks of shares anonymously with prices posted publicly after deals are done.
On June 25, New York state attorney-general Eric Schneiderman said Barclays had told “investors they were diving into safe waters . . . Barclays’ dark pool was full of predators – there at Barclays’ invitation”.
Trading volume in Barclays’s LX pool dropped by two-thirds to 66 million shares in the week beginning June 30, from 197 million in the previous week, the newspaper said, citing data from the Financial Industry Regulatory Authority. The week included the July 4 holiday.
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