High-Speed Trading Probes May Cost European Banks $500 MillionJesse Westbrook
European banks may pay more than $500 million to resolve regulators’ investigations into high-frequency trading, according to a Credit Suisse Group AG estimate made before New York’s attorney general sued Barclays Plc for allegedly misleading its clients.
Probes into private-trading venues known as dark pools and banks’ relationships with high-frequency trading firms may lead to $163 million in losses for Barclays, Credit Suisse analysts said in a June 4 note to clients. Similar investigations could cost UBS AG $187 million and Deutsche Bank AG $157 million, according to the report.
Credit Suisse analysts, led by Amit Goel, sought to estimate “the overall cost, including this kind of charge,” that the banks could face with high-frequency trading investigations, spokesman Sofia Rehman said in an e-mail. “As we get more information, we may adjust our estimate.”
New York’s Eric Schneiderman sued Barclays yesterday, saying the London-based bank was so determined to boost volumes at its dark pool that it lied to customers about the role of high-frequency traders. Schneiderman said in March the industry was under investigation to see if computerized traders who rapidly buy and sell shares had unfair advantages over other investors.
Barclays takes Schneiderman’s allegations seriously and has been cooperating with his investigation, according to a statement from the bank.
Spokesmen at Barclays and UBS declined to comment on the Credit Suisse report. A Deutsche Bank spokesman didn’t immediately respond to a request for comment.
Barclays LX is the second-largest U.S. dark pool. Credit Suisse’s Crossfinder is the biggest, according to data from brokerage regulator the Financial Industry Regulatory Authority.