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What Happened To Barclays' Dark Pool Volume After It Got Caught

Tyler Durden's picture




 

In the last week of June Barclays was charged with lying to clients about its Dark Pool, Barclays LX, where instead of preventing HFT algos from frontrunning institutional buyside orders, the criminal bank was in fact allowing and encouraging its predatory, parasite clients to abuse orderflow in any way they saw fit. The motive, if there was any confusion: to become the largest dark pool exchange in the US, filled with HFT scalpers, now that the bulk of other revenue streams for the British company have trickled to a halt.

It almost succeeded: in the week ending June 16 Barclays was second only to Credit Suisse' Crossfinder ATS with 312.1 million total shares traded on some 1.6 million in total trades.

Unfortunately for Barclays it should put its ambitions on permanent halt, because as was revealed today by FINRA's new "ATS Transparency" database, Barclays total dark pool volume has plunged by a whopping 37% to under 200 million shares.

This happened because as reported previously, Deutsche, Credit Suisse, Royal Bank of Canada, and ITG were among several brokers and banks who stopped all order routing to the criminal organization, whose monetary penalty (nobody is deluded that someone may end up going to jail over this) may be enough to force the bank out of the US equity market for good. What worse, since buyside clients all left Barclays in droves it meant that lurking HFTs would get zero benefit from remaining at Barclays as there were no trades left to frontrun.

Which means that the trend shown below, which shows the snapshot for the week of June 23, is about to get a whole lot worse for Barclays as the trickle becomes an avalanche. 

The good news for Barclays LX' competitors is that all those misplaced clients will now have to go to the CrossFinders, the SigmaXs and LavaFlows of the world to find a non-lit venue, where they will once again be HFT fodder and the game repeats anew.

In the meantime, rest in piece dear Barclays equity trading group. And to think of how much effort went into your "Ongoing Commitment To Transparency" Presentation To Clients...

Source: FINRA

 

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Mon, 07/14/2014 - 17:46 | 4957013 hedgeless_horseman
hedgeless_horseman's picture

 

 

 

Investors are deprived of pricing information and execution, sometimes for microseconds, in part so that they'll put up less resistance when HFTs handle their orders roughly.

In similar news: Exposed: Abuse, Cruelty at Sheep-Shearing Operations in US...

Sheep are deprived of food and water, sometimes overnight, in part so that they'll put up less resistance when shearers handle them roughly.


Mon, 07/14/2014 - 17:37 | 4957014 disabledvet
disabledvet's picture

"YOU'RE DOING THE FRENCH MISTAKE!"

There has to be at least a musical in here somewhere...

Mon, 07/14/2014 - 17:47 | 4957059 orangegeek
orangegeek's picture

sweet justice

Mon, 07/14/2014 - 17:52 | 4957076 q99x2
q99x2's picture

Replace the Harvard Imperialists with open source software.

Mon, 07/14/2014 - 17:57 | 4957097 NOTaREALmerican
NOTaREALmerican's picture

Just doesn't have the same rhythm that "Down with the Imperialist Capitalist pigs" has. 

Mon, 07/14/2014 - 18:30 | 4957199 bag holder
bag holder's picture

Why complicate things with a bunch of software? Unless the goal is to make computer programmers the new feudal lords, you could just put all the laws on Wikipedia and say that the latest edit is always the current law.

Mon, 07/14/2014 - 18:06 | 4957122 yogibear
yogibear's picture

Some Russian or Chinese hackers should get to work.

Mon, 07/14/2014 - 17:56 | 4957094 Al Huxley
Al Huxley's picture

Barclays is a pretty big SIFI, isn't there some way the FED or Bank of England can mandate that they get a certain amount of customers?  I mean, it seems pretty unfair that they should be subjected to this kind of market punishment just because they were fucking over their clients.  That kind of thing only happens to the outsiders, doesn't it?  Not to club members?  I mean, what's the fucking point of being in the .01% club if you can't do whatever the fuck you want without consequence.?

Mon, 07/14/2014 - 18:05 | 4957116 yogibear
yogibear's picture

Hackers need to get into the systems and start playing that should reallt mess up the HFTs.

Some added 0's here and truncating number would do wonders.

All those dark pools turn to sludge.

Mon, 07/14/2014 - 19:40 | 4957392 Keltner Channel Surf
Keltner Channel Surf's picture

Fine, let's just make sure in our quest to save pennies for 'sophisticated' endowments and state retirement funds that we don't kill overall trading entirely, as some of us still pretend to make a living this way.  Today's DOW and S&P charts are effective metaphor's, if viewed as EKGs:  the patient woke up, then immediately died.  "Computerized Trading" to "No Trading" isn't progress.  Don't tell me the drop in trading volume/volatility is people being afraid of HFT -- it's the exact opposite, HFT volumes had been plummeting, even before the Lewis book.  Perhaps when excesses are rooted out, "real" trading can return (oh, pretty please ...)

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