Barclays fined $70 million by US regulators over dark pools

Landmark: Barclays will pay the largest-ever fine relating to dark pools

Kirsty Wigglesworth/AP

1 February 2016

Barclays will pay a $70 million (£49 million) fine to US regulators to settle allegations that it misled investigators about its so-called dark pools.

The settlement, revealed by federal and New York state officials, will also see the bank admit it broke the law.

Credit Suisse also settled allegations relating to its own dark pools, with the combined fines and disgorgement totalling $154.3 million.

Dark pools are private exchanges where orders are not visible to the market until they are executed. They have been used by institutional investors who want to avoid the risk that other traders will work out their strategies and move prices accordingly.

US regulators claimed that both Barclays and Credit Suisse misled those using the venues, saying they would be protected from predatory high-frequency trading tactics.

Barclays' $70 million will be split evenly between the US Securities and Exchange Commission and New York state. It will also admit it violated securities laws and agree to install an independent monitor to ensure that its dark pool "Barclays LX" operates properly in the future.

Credit Suisse will pay a $60 million fine split between the regulators, plus an additional $24.3 million in disgorgement to the SEC for executing 117 million illegal sub-penny orders out of its dark pool known as "Crossfinder." Credit Suisse will neither admit nor deny the allegations.

Barclays said in a statement: "Barclays is pleased to have reached agreement with both the SEC and the New York Attorney General to conclude their investigations concerning our US equities ATS practices and Market Access controls. The agreement will enable us to focus all of our efforts on serving our clients."

A Credit Suisse spokeswoman said the bank was pleased to have resolved the matters with the SEC and the New York attorney general.

Additional reporting by Reuters

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