Barclays Dark Pool Drew Early Alarms (WSJ)
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.—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. 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.
Barclays Dark Pool Volume Fell 66% Week After Lawsuit (Bloomberg)
About 66 million U.S. shares were traded in the dark pool in the week of June 30, down 66 percent from about 197 million in the previous week, according to data from the Financial Industry Regulation Authority. The drop follows a 37 percent decline from 312 million in the previous week, data show. Barclays lied to customers and masked the role of high-frequency traders as it sought to boost revenue at one of Wall Street’s largest private trading venues, New York Attorney General Eric Schneiderman said in a complaint filed June 25. Barclays Chief Executive Officer Antony Jenkins, in a memo to staff, said the lawsuit represents “serious charges that allege a grave failure to live up to our values.”
U.K. Prosecutors Open Foreign-Exchange Rigging Investigation (Bloomberg)
U.K. prosecutors opened a criminal investigation into alleged manipulation of foreign-exchange benchmarks. “The Serious Fraud Office has today opened a criminal investigation into allegations of fraudulent conduct in the foreign exchange market,” the London-based agency said in an e-mailed statement today. Authorities around the world have been investigating whether traders rigged the $5.3 trillion-a-day currency market after the Financial Conduct Authority, the British markets regulator, began a review last year. Regulators and prosecutors are scrutinizing allegations that dealers at the world’s biggest banks traded ahead of their clients and colluded to rig the WM/Reuters rate, a benchmark that pension funds and money managers use to determine what they pay for foreign currencies.
Australia Regulator Censures Royal Bank of Scotland (WSJ)
Australia’s securities regulator has censured Royal Bank of Scotland Group PLC after the bank found some of its traders likely tried to influence the daily setting of the country’s benchmark interbank lending rate. As a result, an independent compliance expert will review the bank’s record with rules on contributions to interest-rate benchmark settings and will report back to the Australian Securities and Investment Commission, the regulator said. RBS also agreed to steps including a review of its communications-surveillance systems and giving refresher training to traders.
Kim Kardashian, Kanye West pay $500,000 for baby body double: report (NYDN)
British glossy magazine Grazia claims the couple held “auditions” in Los Angeles at a specialist agency to find a child who is the spitting image of North, according to The Mirror. The magazine also reports that the couple hired a body double nanny. Read more »