Barclays "dark pool" — an alternative trading venue where orders aren't publicly posted — has continued to see its volume of shares traded decline following a lawsuit by New York Attorney General Eric Schneiderman that accused the bank of misleading investors who participated in the exchange and favoriting high-speed traders over institutional investors.
In the week starting June 16, Barclays had 312 million shares traded on its dark pool, according to data collected by the financial industry self-regulator Finra, second only to Credit Suisse's trading venue. The next week, however, Barclays dropped to fifth, with only 197 million shares traded, a 37% decline. Barclays's dark pool has been at times the largest in the country, according to the New York Attorney General's complaint.
In data reported Monday morning, Barclays's dark pool only had 66 million shares traded in the week starting June 30, a 66% decline, putting Barclays in 12th place in total shares traded, below dark pools run by every major bank as well as dark pools not affiliated with banks like IEX, the firm profiled in Michael Lewis's Flash Boys, and Investment Technology Group. The slide in total shares traded with Barclays came with a decline in volume across Wall Street, with Credit Suisse's dark pool going from 348 million shares traded in the week of June 16 to 291 million in the week started June 30. The data tracks shares traded in the S&P 500, Russell 1000, and some exchange traded funds.
The lawsuit, filed June 25, alleged that marketing materials used to draw investors to its pool, known as Barclays LX, were misleading about the presence of high-speed traders and that the bank "secretly gave high frequency trading firms information and other advantages over other clients trading in the dark pool...to maximize the effectiveness of their aggressive trading strategies in the dark pool."
The controversy over its equity-trading operation is another black eye for the British bank which is seeking to pull out of high-risk or controversial businesses. After the complaint was filed, the bank's chief executive officer Antony Jenkins said in an internal memo that "I will not tolerate any circumstances in which our clients are lied to or misled and any instances I discover will be dealt with severely." The bank is expected to respond to Schneiderman's complaint this week. The bank's share price is down 23% this year and has fallen just over 1% today, to £208.90.
Matthew Zeitlin is a business reporter for BuzzFeed News and is based in New York. Zeitlin reports on Wall Street and big banks.
Contact Matthew Zeitlin at email@example.com.
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