Barclays Dark Pool Trading Volume Reverses Some Losses

Barclays Plc saw a rise in the number of U.S. shares traded in its dark pool, paring some of the losses in the two weeks after it was sued by New York for allegedly lying to customers of the venue.

About 94 million U.S. shares were traded in the dark pool in the week of July 7, up 42 percent from about 66 million in the previous week, which included the July 4 public holiday, according to data from the Financial Industry Regulatory Authority. The increase follows two weeks of declines from 312 million starting June 23, data show.

Barclays is fighting allegations it lied to customers and masked the role of high-frequency traders as it sought to boost revenue at what used to be Wall Street’s second-largest private-trading venue. The bank said on July 24 that it’s seeking to have New York Attorney General Eric Schneiderman’s June 25 complaint thrown out of court, with the lawsuit based on what it called “clear and substantial factual errors.”

The stock fell 0.2 percent to 217.80 pence at 3:48 p.m. in London. The shares have dropped 20 percent this year, making Barclays the worst performer among Britain’s five largest banks.

‘Highly Sophisticated’

Barclays said that the attorney general’s office also took New York’s securities law -- the Martin Act -- too far. The suit ignores that customers who use the Barclays LX are “highly sophisticated traders and asset managers” who are responsible for investing millions and billions of dollars worth of assets, the bank said in a court filing.

“We do not believe this suit is justified, and we have a duty to our shareholders, clients and staff to defend our position,” Barclays said in a statement.

The London-based bank is facing various legal battles around the world over allegations of past misconduct, with a potential bill that could rise to as much as 7 billion pounds ($12 billion) over the next four years, analysts at Nomura International Plc led by Chintan Joshi, who has a buy rating on the stock, wrote today in a note to clients.

Barclays was fined 290 million pounds in 2012 by regulators in the U.S. and the U.K. for submitting false London and euro interbank offered rates, prompting Robert Diamond to resign as chief executive officer. He was replaced by Antony Jenkins.

Lloyds Banking Group Plc said today it agreed to pay 226 million pounds in fines to U.S. and U.K. regulators over Libor. At $1.5 billion, UBS AG paid the highest fine.

Barclays’s dark pool dropped out of the 10 largest U.S. venues following two weeks of declines, having previously been second to Credit Suisse Group AG’s Crossfinder, data show. The Zurich-based bank’s trading venue, still ranked No. 1, saw a 28 percent increase in the week beginning July 7, Finra data show.

The case is New York v. Barclays Capital, 451391-2014, Supreme Court of the State of New York, County of New York.

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