The trouble surrounding bulge bracket-operated dark pools seems could be coming to end soon, at least for Barclays and Credit Suisse.
As first reported by MarketWatch, Credit Suisse Group and Barclays, who operate the two largest dark pool trading venues Crossfinder and LX, reportedly have entered settlement negotiations with the New York attorney general and the Securities and Exchange Commission over allegations of wrongdoing in the private trading venues, said people familiar with the matter.
Credit Suisse is in talks to pay a fine in the high tens of millions, which would be the largest fine ever levied against an operator of a private trading venue, and the Barclays discussions also suggest a large fine, the people said.
See Also:ITG Faces Fight for Reputation Amid Fallout From Dark-Pool Probe
Barclays has been under the gun regarding its LX pool with the New York attorney general since July 2014. It was accused of lying to clients about the extent of high-speed trading in its dark pool.
Deals with the banks could come as soon as the next several weeks, though talks could still fall apart, they said.
Representatives of Credit Suisse and Barclays declined to comment.
Dark pools, along with internalized trading, comprise roughly 40% of all equity trading in the U.S., according to Tabb.
“This may serve to finally sterilize dark pools,” said Larry Tabb, chief executive of Tabb Group, referring to the likelihood that operators disclose more information about trading activity and stay in compliance.
Last month, ITG agreed to pay $20.3 million to settle charges that its POSIT dark pool violated certain protocols.
In January UBS agreed to pay $14 million to settle allegations with the SEC it created an uneven playing field inside its dark pool.
Deutsche Bank AG, Morgan Stanley and Goldman Sachs Group Inc. also have been investigated by the New York attorney general. The banks declined to comment.
