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July 21 (Reuters) - Volume in Barclays Plc's private U.S.trading venue, or "dark pool," fell 79 percent in the week and ahalf after the New York attorney general accused the Britishbank of giving an unfair edge to high-speed traders, accordingto data released on Monday.
The number of shares traded in Barclays' LX, analternative trading system, dropped 66.3 percent in the week ofJune 30 to around 66.4 million shares from around 197 millionshares the previous week, according to a report by the FinancialIndustry Regulatory Authority. The report from FINRA, WallStreet's self-funded regulator, included only the most widelytraded securities.
The drop followed a 37 percent decline in the week the probewas announced.
Dark pools are broker-run trading venues where investorstrade shares anonymously and trading data is only made availableafterward, reducing the chance of information leaking aboutlarge orders. The lack of transparency has drawn the scrutiny ofregulators.
New York Attorney General Eric Schneiderman said on June 25that he had evidence that Barclays' staff had falsifiedmarketing materials and misled big institutional clients in aneffort to expand its dark pool and increase revenues. He accusedthe British bank of giving an edge to brokers and proprietarytrading firms that use aggressive high-frequency tradingstrategies while telling other clients it was protecting themfrom such tactics.
Deutsche Bank, Credit Suisse, RoyalBank of Canada and Investment Technology Group were among several brokers and banks that said they had stoppedrouting orders to Barclays' dark pool after the securities fraudlawsuit was filed.
For the week of June 30, Barclays' dark pool was thetwelfth-largest in the United States, down from thesecond-largest two weeks earlier.
Dark pools run by Credit Suisse, UBS, Bank ofAmerica's Merrill Lynch, Deutsche Bank, Morgan Stanley, Goldman Sachs, JPMorgan, KCG,Citigroup, IEX, and ITG had more volume.
In early June, dark pool operator Liquidnet paid $2 millionto the U.S. Securities and Exchange Commission to settle chargesthat the electronic trading network had improperly used itssubscribers' confidential trading information to market itsservices. On July 1, Goldman Sachs agreed to payan $800,000 fine to FINRA to settle a case over pricing ruleviolations in its dark pool. (Reporting by John McCrank in New York; Editing by Dan Grebler)
