Last checked at 
LONDON (Alliance News) - The New York State Department of Financial Services on Wednesday imposed a new USD150.0 million fine and said that the bank used a "Last Look" system to automatically reject client orders that would be unprofitable because of price swings during milliseconds-long latency hold periods.
The New York regulator ordered the bank to terminate an employee with the role of global head of electronic fixed income, currencies, and commodities.
"This case highlights the need for greater oversight and action to help prevent the misuse of automated, electronic trading platforms on Wall Street, which is a wider industry issue that requires serious additional scrutiny," Acting Superintendent of Financial Services Anthony Albanese said in a statement.
According to the regulator, Barclays would find ways to avoid explaining to clients why their orders were being rejected, instead blaming "technical issues" or giving "vague" responses.
The Last Look system was designed to protect Barclays in cases when increasingly sophisticated automated electronic trading systems might detect market movements in a matter of milliseconds before the bank's systems. Under those circumstances, such an electronic trading business could take advantage by trading with Barclays before the bank's systems adjust.
The protective system was meant to guard the bank against what is known as "toxic flow". However, the New York regulator said that Barclays didn't seek to distinguish toxic flow from cases when prices merely happened to move in favour of the customer and against the bank after the entry of the customer's order to Barclays' systems.
The regulator said that "instead of employing Last Look as a purely defensive measure, Barclays instead used it as a general filter to reject customer orders that Barclays predicted, based on price movements during the hold period, would be unprofitable to the bank".
Barclays revised Last Look in September and October 2014, following the start of the regulator's investigation.
"In executing these revisions to make Last Look symmetrical, Barclays neglected to update one of its trading platforms, causing 7% of its trading volume to continue under the asymmetrical paradigm until August 2015. Barclays has since updated all trading platforms," the regulator said.
Barclays said the fine will be reflected in its results for the fourth quarter.
"Barclays continues to co-operate with other ongoing investigations and to manage related litigation risks as previously disclosed," Barclays said.
Shares in Barclays were down 0.2% at 226.90 pence on Wednesday afternoon.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
Copyright 2015 Alliance News Limited. All Rights Reserved.
