Barclays’ ‘dark pool’ sees 33% dip in shares traded

Barclays’ ‘dark pool’ saw a 33% weekly drop in the number of shares traded, suggesting a US lawsuit alleging it misled customers continues to weigh on volumes while threatening revenue at its investment bank.

About 97m shares were exchanged on the private trading platform in the week of October 20, down from 144m a week earlier. The volume was 129m in the week of October 6.

Barclays is fighting New York attorney general Eric Schneiderman’s allegation it lied to customers and masked the role of high-frequency traders to boost revenue at what used to be Wall Street’s second-largest dark pool. The scandal has spilled over into other areas of the investment bank and contributed to a 25% decline in equities trading in the third quarter, finance director Tushar Morzaria said on October 30.

“They seem to suggest there had been a significant impact, a knock-on effect to the equities business because of the dark pool issues,” said Shailesh Raikundlia, an analyst at Banco Espirito Santo in London.

Trading volumes in Barclays’s dark pool decreased from the highest number of transactions since Schneiderman made his allegations on June 25 in the previous week. The week of October 13 included a sell-off in US equities that pushed the Standard & Poor’s 500 Index to its biggest intraday plunge since 2011 amid fears over weakening economic data.

Barclays’ dark pool dropped out of the 10 largest US venues in July, surrendering second-place to UBS, Finra data show. About 312m million shares were traded in the week of June 23 on Barclays’s platform before the New York attorney general filed his claim.