The Wall Street Journal: Barclays dark pool drew early alarms
By Scott Patterson and Bradley Hope
A Barclays Plc bank branch in Barking, U.K.
Trading firms and employees raised concerns about high-speed traders at Barclays PLC’s dark pool months before the New York attorney general alleged in June that the firm lied to clients about the extent of predatory trading activity on the electronic trading venue, according to people familiar with the firms.
Some big trading outfits noticed their orders weren’t getting the best treatment on the dark pool, said people familiar with the trading. The firms began to grow concerned that the poor results resulted from high-frequency trading, the people said.
In response, at least two firms — RBC Capital Markets and T. Rowe Price Group Inc. /quotes/zigman/84920/delayed/quotes/nls/trow TROW +1.04% — boosted the minimum number of shares they would trade on the dark pool, letting them dodge high-speed traders, who often trade in small chunks of 100 or 200 shares, the people said.
Crash clouds world’s biggest AIDS summit
Six AIDS experts were killed when Malaysia Airlines Flight 17 was shot down over eastern Ukraine. Dr. Mervyn Silverman speaks from the International AIDS Conference in Melbourne.
Meanwhile, a number of Barclays employees privately expressed concerns to top stock-trading executives that the firm was giving high-frequency traders too much access to its dark pool without fully informing clients, according to people familiar with the complaints. Investment firms worry that high-speed traders can detect their orders in dark pools and trade elsewhere using the information, moving the price against the companies.
Such concerns, expressed privately by clients and employees, now have become a public embarrassment for the London-based bank, which has been making efforts to clean up its image after its involvement in an interest-rate-manipulation scandal.
Barclays /quotes/zigman/301787/delayed UK:BARC +0.76% is expected to respond to the attorney general’s civil complaint this week. The firm plans to mount a strong defense against the allegations, said people familiar with the bank’s thinking. It is expected to argue that certain emails and other documents cited in New York’s complaint were taken out of context, the people said.
“We are undertaking a full internal investigation into these allegations,” Barclays Chief Executive Antony Jenkins said in a memo to employees a day after the case was filed.
An expanded version of this report appears on WSJ.com .
More MarketWatch news:
Small caps’ slump, Ukraine fears may hold up market
New York City is the most unhappy city in America
SeaWorld battles whale of a protest
US : U.S.: Nasdaq
July 18, 2014 4:00p
$ 21.34 billion
UK : U.K.: London
July 18, 2014 5:07p