Clients appear to be giving a massive 'thumbs down' to Barclays' dark pool trading venue - which is reported to have lost nearly 80 per cent of its volumes after Barclays was accused of misleading customers. David Pollard reports.
It's less than a month since a New York attorney filed a lawsuit against the bank. Alleging Barclays lied to clients and gave high-frequency traders an unfair advantage. At the centre of the lawsuit: the British bank's so-called 'dark pool' trading system. Now, it appears, hurting badly in the fallout. Trading volumes were down nearly 80 per cent in the week and half following the lawsuit. That's according to Wall Street regulator FINRA. Sources saying that in Europe and Asia as well as the U.S., clients stopped trading equities with Barclays. How far to go in contesting the allegations will be a dilemma for chief executive Antony Jenkins. He's pledged sweeping reform - but the dark pool system is part of the bank's equities business that it had planned to keep largely intact. While the future still looks far from certain for the sector as a whole. The ECB's upcoming asset review is one issue. Then there's revenue growth: sluggish at best. And the problem that doesn't go away: litigation. Andrea Williams is a senior fund manager at Royal London Asset Management. SOUNDBITE (English) ANDREA WILLIAMS, SENIOR FUND MANAGER, ROYAL LONDON ASSET MANAGEMENT, SAYING: "Well, we're underweight the sector where I'm still very concerned about the sort of the ongoing litigation and the number of charges that's still to be incurred by the likes of Deutsche Bank, for example. So you're never quite sure what the capital raisings that may be coming up because of that and also because of the AQR going on in Europe and the capital that may be required for that.'' For litigation alone, the demands investors receive for more capital could be heavy. One set of analysts saying that between now and 2016, European banks still face a potential legal bill of $50 billion.