Big banks have started pulling their business out of Barclays’ “dark pool” after the British bank was sued by New York’s top securities regulator for allegedly misleading institutional investors over its anonymous trading venue.
Deutsche Bank and Credit Suisse were among the institutions that yesterday withdrew from Barclays’ LX dark pool in the wake of the lawsuit from Eric Schneiderman, the New York attorney-general. Barclays said any drop in trading volumes at LX might be due to a technical glitch.
More than $13bn was wiped off the market value of the 10 biggest dark pool owners as analysts assessed who US prosecutors might target next. Shares in Barclays, which operates one of the biggest, lost more than 6 per cent, while shares in other large operators, including Credit Suisse, UBS and Deutsche Bank, also fell.
Investors called for a management shake-up at Barclays’ equity trading business and said the US lawsuit underlined the challenge for Antony Jenkins, chief executive, to achieve his goal of changing the bank’s culture.
Mr Schneiderman cited a pattern of “fraud and deceit” by Barclays starting in 2011. He accused the bank of lying to clients about the level of protection they would receive in its dark pool from high-frequency traders aiming to profit from their speed advantage.
Dark pools allow investors to trade large blocks of shares anonymously, with prices posted publicly only after deals are done. They were created as a way for institutional investors to place large orders without disadvantaging themselves by signalling to the wider market any market-moving trades.
But regulators, including the Securities and Exchange Commission, are concerned they may allow high-frequency traders to exploit other investors’ orders to profit in an opaque, unregulated venue. The SEC is still investigating Barclays.
“The allegation that investors have been misled is clearly not acceptable,” said Helen Roberts at the UK’s National Association of Pension Funds, whose members have almost ￡900bn of assets. “There should be a level playing field for all investors.”
The dark pool lawsuit is the latest legal setback for Barclays, which in 2012 agreed a ￡290m settlement in the Libor rate-fixing scandal and last month paid a ￡26m fine after one of its traders manipulated the London gold fix.
“We felt that the flow of bad news about bank conduct was slowing down, but it looks like it continues to be a problem,” said Jennifer Walmsley, director of Hermes Equity Ownership Services. A former senior equities banker said Barclays’ case was far from unique. “Most of the bulge-bracket firms think their clients would do their own due diligence.”
When asked whether other institutions were being probed, Mr Schneiderman said: “I cannot comment on ongoing investigations. The conduct here was so egregious and ongoing we felt we had to move on this.”
纽约州总检察长埃里克?施奈德曼(Eric Schneiderman)提起诉讼后，德意志银行(Deutsche Bank)和瑞信(Credit Suisse)等机构昨日退出巴克莱的LX暗池。巴克莱表示，LX交易量的任何下降可能是技术故障所致。
“投资者被误导的指控显然是不能接受的，”英国退休基金协会(National Association of Pension Funds)的海伦?罗伯茨(Helen Roberts)表示。该协会的成员拥有近9000亿英镑资产。“应该有一个面向所有投资者的公平竞争环境。”
“我们之前还觉得有关银行行为的坏消息开始减少，但看起来这仍是一个问题，”Hermes Equity Ownership Services董事珍妮弗?沃姆斯利(Jennifer Walmsley)表示。一名前资深股票银行家表示，巴克莱的情况并非独一无二。“多数大型跨国投行认为，他们的客户会自己做好尽职调查。”