(Bloomberg) — Credit Suisse Group AG Chief Executive Officer Brady Dougan said he remains confident in private trading venues following a probe into a dark pool operated by Barclays Plc.
Our view is that a lot of the electronic trading systems are actually very good for the market, Dougan told Bloomberg Televisions Manus Cranny Tuesday. Youre able to execute things these days at levels and with an ease that was not possible 10 years ago. There are a lot of good things there.
Dark pools came under increased scrutiny after New York Attorney General Eric Schneiderman filed a complaint on June 25 saying that Barclays lied to customers and masked the role of high-frequency traders at its electronic trading venue. Credit Suisse, which operates Wall Streets largest dark pool, had a 19 percent drop in trading volume the following week, data from the Financial Industry Regulatory Authority shows.
Trading fluctuations could be due to a number of reasons, Dougan said at a press conference in Zurich, when asked about theFinradata, adding that he doesnt expect any material changes to the electronic-trading business as a whole.
We dont see anything that we would view as a trend, he said.
Electronic Trading
Credit Suisse said it makes about $30 million in annual revenue from its Crossfinder venue. UBS AG and Bank of America Corp. are also among banks operating dark pools in the U.S.
The exchange uses computer algorithms to match buyers and sellers anonymously until a trade has been completed. This gives institutions the ability to trade large blocks of stock without exposing their position to the open market.
Two of the biggest currency-trading banks have heavily invested in electronic-trading platforms while cutting staff. Switzerlands largest bank started UBS Neo, which replaced almost 100 internal systems with one that allows institutional clients to trade a range of asset classes.
Barclays last year started Gator, which allows clients to trade foreign exchange with the same technology its traders already used internally to quote prices.
Obviously Credit Suisse has been very active in this area, Dougan said, commenting on electronic trading. We have over time developed good trading systems in these areas.
System Abuses
Electronic dealing, which accounted for 66 percent of all currency transactions in 2013, up from 20 percent in 2001, will increase to 76 percent within five years, according to Aite Group LLC, a Boston-based consulting firm that reviewed Bank for International Settlements data. About 81 percent of spot trading — the buying and selling of currency for immediate delivery — will be electronic by 2018, according to Aite.
Dougan said on a conference call he doesnt see any material issues on dark pools, when asked about litigation risks, adding that its early in the process.
Clearly there have been abuses to the system — weve actually worked hard to try to ensure that these abuses are actually driven out of the system and well see how it develops over time, Dougan said. We continue to work closely with the regulators in making sure that market is structured in a way that provides a fair playing field for everybody.
