Barclays, Credit Suisse Acquiesce to SEC Dark Pool Settlements
Barclays and Credit Suisse agree to pay $70 million and $84.3 million, respectively, to settle cases of misrepresentation of dark pool operations.
Both Barclays and Credit Suisse were charged with misleading investors over how the banks' respective dark pool trading venues operated. Barclays has agreed to pay $35 million to both the SEC and the New York Attorney General (NYAG), while Credit Suisse will pay $30 million to the SEC, $30 million to the NYAG, and $24.3 million in disgorgement and prejudgment interest to the SEC for a total of $84.3 million.
The SEC's charge against Barclays was focused on the bank's failure to police its dark pool through a feature called "Liquidity Profiling", which was meant to police order flow in its LX dark pool, while the bank ran weekly surveillance for toxic order flow. The SEC found that Barclays neither ran surveillance or used the Liquidity Profiling tool, and also has over-ridden the feature by moving some subscribers from the most aggressive categories to the least aggressive, without informing investors.
"Barclays misrepresented its efforts to police its dark pool, overrode its surveillance tool, and misled its subscribers about data feeds at the very time that data feeds were an intense topic of interest," said Robert Cohen, co-chief of the SEC's Market Abuse Unit.
Credit Suisse, meanwhile, was charged with misrepresenting that its Crossfinder dark pool utilized a feature called Alpha Scoring to characterize subscriber order flow monthly in an objective and transparent manner.
In its charge, the SEC said that Alpha Scoring included "significant subjective elements, was not transparent, and did not categorize all subscribers on a monthly basis" and that Credit Suisse "misrepresented that it would use Alpha Scoring to identify 'opportunistic' traders and kick them out of its electronic communications network, Light Pool. In fact, Alpha scoring was not used for the first year that Light Pool was operational."
In December last year, three of JPMorgan's Hong Kong-based equities businesses were fined a collective $30 million by the Securities and Futures Commission (SFC) for failing to properly implement its dark pool trading venue.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Regulation
Preparing for the gathering storm
The Markets in Crypto-Assets (Mica) regulation came into force across the European Union on June 29 to enhance the transparency and integrity of the industry’s burgeoning crypto markets. Travis Schwab, CEO of Eventus, discusses his firm’s Mica strategy…
American Bankers Assoc. asks SEC: Do you know what you’re doing?
The industry group disagrees severely with regulators’ interpretation of the Financial Data Transparency Act, hinting at possible legal action in a recently published comment letter.
DORA will change the buy vs. build debate… maybe
Waters Wrap: With DORA’s deadline looming, trading firms are having to reassess their long-term tech strategies. Anthony wonders if that means more building and less buying.
The SEC needs a hand with artificial intelligence
The SEC wants to take a tough stance on AI, but it has a talent problem… or a marketing problem. Or both…
Off-channel messaging (and regulators) still a massive headache for banks
Waters Wrap: Anthony wonders why US regulators are waging a war using fines, while European regulators have chosen a less draconian path.
Banks fret over vendor contracts as Dora deadline looms
Thousands of vendor contracts will need repapering to comply with EU’s new digital resilience rules
Chevron’s absence leaves questions for elusive AI regulation in US
The US Supreme Court’s decision to overturn the Chevron deference presents unique considerations for potential AI rules.
Aussie asset managers struggle to meet ‘bank-like’ collateral, margin obligations
New margin and collateral requirements imposed by UMR and its regulator, Apra, are forcing buy-side firms to find tools to help.