NEW YORK: Trading activity has slumped in Barclays Plc’s US share trading venue after New York’s attorney general accused the British bank of misleading its customers and giving an unfair edge to high-speed traders.

Volume in Barclays’ so-called “dark pool” electronic trading venue has slumped by 79 pc in the week and a half after New York Attorney General Eric Schneiderman filed a lawsuit against the bank, data showed on Monday.

The number of shares traded in Barclays LX, an alternative trading system, dropped 66pc in the week of June 30, according to the data released by FINRA, Wall Street’s self-funded regulator. That followed a 37pc decline in the week the probe was announced.

Many clients had stopped trading equities with Barclays in the wake of the damaging allegations, or had changed how they trade — such as not allowing orders to be directed to its dark pool, or increasing the minimum order size to avoid high-speed traders who typically trade in small chunks, industry sources said.

For the week of June 30, Barclays’ dark pool was the 12th largest in the United States, down from the second largest two weeks earlier. Dark pools allow big blocks of shares to be traded anonymously without informing the market until completion to minimise the risk of the price moving to the disadvantage of an investor should the market get wind of the trade before it is executed.—Reuters

Published in Dawn, July 22nd, 2014