Barclays and Credit Suisse have been fined an estimated £108 million following an investigation into both banks’ private trading exchanges. These have been described as ‘dark pools’ which have been exploited by ‘predatory and high frequency traders’ to the expense of the banks’ customers. The attorney general of New York, Eric Schneiderman argued the fines were a massive step forward in the fight against dark pool trading and would protect thousands of future investors.
Barclays has since admitted it misled investors and has violated numerous securities laws in both the US and the UK. In a step to avoid future breaches and demonstrate higher levels of transparency, it has agreed to install an independent monitor to oversee its Barclays LX. Dark pools are private exchanges by banks used to trade stocks and bunds, however there are no public prices. Trades are simultaneously carried out in secret, favouring high speed traders. Barclays have however denied that it favoured high speed traders, despite monitoring for high speed trading. Both Barclays and Credit Suisse have made false statements to customers and warrant the high fine imposed upon them.