(Bloomberg) — Credit Suisse Group AG, Switzerlands second-biggest bank, is responding to government and regulatory inquiries on the running of its dark pool.
Credit Suisse is cooperating with the requests, the Zurich- based bank said in its financial report for the second quarter today. It is also among more than thirty defendants named in putative class action lawsuits alleging violations of U.S. securities laws related to high-frequency trading, it said.
Deutsche Bank AG has also been answering regulators queries on high-frequency trading, while the SEC has been investigating UBS AGs private-trading venue since early 2012, the banks said in their quarterly reports earlier this week. Dark pools came under increased scrutiny after New York Attorney General Eric Schneiderman filed a complaint in June saying that Barclays Plc lied to customers and masked the role of high- frequency traders at its electronic trading venue.
Credit Suisse runs Crossfinder, the biggest of these alternative trading systems measured by the number of U.S. shares traded, according to data published by the Financial Industry Regulatory Authority.
We obviously see a lot of benefits from that business but we also know that there are potential abuses there as well, Chief Executive Officer Brady Dougan said in a telephone conference after the bank published second-quarter earnings last week. Credit Suisse works with regulators to avoid as many abuses as possible, he said.
There has been a significant increase in inquiries on dark pools recently, Dougan said.
Dark pools are alternative trading systems where transactions are concealed from the public. They were created as a haven for institutional investors seeking to trade large blocks of shares in secret, hoping to minimize their impact on prices so they can get a better deal on their trades.