The Financial Industry Regulatory Authority's (FINRA) latest US dark pool data reveal the market impact of recent official investigations, with Barclays' alternative trading systems (ATSs) losing more than two thirds of their trading volumes.
A complaint issued by New York state attorney-general Eric Schneiderman on June 25 appears to have significantly undermined the share and trade volumes of Barclays' two ATSs.
In an official summons from the Supreme Court of the State of New York, Barclays' dark pool operations were referred to explicitly as a "case about fraud and deceit by one of the world's largest banks".
With ensuing heavy media coverage of the allegations, both LATS Barclays Capital and LEHM Barclays Capital have struggled to maintain their former trading volumes. Data published this week relating to trading activity in the week commencing 21 July, the former had reduced its total weekly number of shares to 87,633,212, while the latter's stood at 2,245,378.
This means Barclays' US ATS volumes have declined by 70% from the 305 million shares they were trading back in the week commencing 12 May. Barclays' ATS volumes were surpassed only by Credit Suisse and the Swiss bank's two ATSs have now increased their share of the US dark pool market. Data for the week commencing 21 July showed Credit Suisse's total ATS trading volumes at 386 million shares, an increase of 12 million shares since the week commencing 12 May.
Clearly, Barclays' recent decision to oppose Schneiderman's claims has failed to preserve their dominance of the American ATS market. On July 24, Barclays officially filed a legal motion calling for the dismissal of the lawsuit, asserting that Schneiderman was acting beyond his legal remit and encroaching upon that of the US Securities and Exchange Commission (SEC).
Last week Schneiderman's office said it had widened its investigation to ATSs operated by Morgan Stanley and Goldman Sachs. UBS, Deutsche Bank and Credit Suisse have all acknowledged that they are cooperating with the requests of regulators for information about how their alternative trading systems work.