This page has been archived and commenting is disabled.

Citi Shutters Lavaflow - 5th Largest 'Dark Pool' In America

Tyler Durden's picture




 

When the 5th largest  "dark pool" (although as Citi would like us to believe, it is not actually a dark pool. Per their PR office: "To be clear --- LavaFlow is not a dark pool - it’s an ECN (Electronic communications Network) -- a type of alternative trading System (ATS) that trades listed stocks and other exchange-traded products. Unlike dark pools, another type of ATS, ECNs display orders in the consolidated quote stream." - we will let Citi definite however they wish; for us it was, is and, will no longer be, a dark pool) trading venue (by volume) in America is shuttered, as Citi notes because its "capital, resources and efforts would be better redeployed elsewhere," you know there is a problem in US stock trading volumes and liquidity. Everyday we get 'glimpses' of this collapse - most recently yesterday's AAPL flash-crash - as human traders (who provide the 'fish' for the machines) disappear and HFT liquidity-providers pull liquidity in a flash. Crucially, as we hinted previously, we wonder if the large firms are exiting the dark pool business before some engineered market collapse is pinned on these opaque 'markets' who have come under increased regulatory scrutiny.

The demise of LavaFlow...

 

We recently noted that Citi's Lavaflow platform had been overtaken by the anti-HFT group IEX...

 

And a more detailed view of the top dark pools in context courtesy of Nanex:

And after facing fines earlier in the year...

A private trading venue owned by Citigroup will pay a $5 million penalty to settle charges that it failed to protect customers' data, marking the latest case in a crackdown by U.S. regulators over alleged market rule violations.

 

The Securities and Exchange Commission said the unit, LavaFlow Inc., is settling the civil case without admitting or denying the charges.

 

The SEC said LavaFlow failed to put adequate safeguards and procedures in place to protect its subscribers' confidential trading information from March 2008 through March 2011.

 

...

 

The SEC's prior three cases against ATS venues were targeting a type of platform known as a "dark pool," which lets investors trade anonymously and does not publicly display quotes.

 

LavaFlow is distinct in that it is not a dark pool. Rather, it operates as an "electronic communications network," or ECN, a trading venue that displays some information about pending orders in the system.

Reuters reports, Citi is pulling the plug...

Citigroup Inc said on Tuesday it is shutting down its alternative stock trading venue LavaFlow at a time when regulatory scrutiny around broker-run trading platforms has increased, forcing banks to rethink their costs.

 

"Following a recent review of the LavaFlow ECN, we have decided that our capital, resources and efforts would be better redeployed to other areas within Citi’s Equities Division," Citi said in a statement.

Oh well, one Dark Pool, pardon, ECN, less. So who will Schneiderman go after next?

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 12/02/2014 - 13:06 | 5508914 Headbanger
Headbanger's picture

ABANDON SHIP!

ABANDON SHIP!

Tue, 12/02/2014 - 13:10 | 5508941 kliguy38
kliguy38's picture

the algo works well in a Fed driven bull market......but the handrighting is on the wall for what's coming and the Algos that stay in this are going to be slaughtered

Tue, 12/02/2014 - 13:13 | 5508956 Bay of Pigs
Bay of Pigs's picture

Jump you Fuckers...

Tue, 12/02/2014 - 14:57 | 5509542 outamyeffinway
outamyeffinway's picture

Blue skies forever, bitchez?? Maybe.....? No... Dam!

Tue, 12/02/2014 - 14:15 | 5509287 DavidC
DavidC's picture

Handwriting, not handrighting...

DavidC

Tue, 12/02/2014 - 13:08 | 5508935 youngman
youngman's picture

In other words they know they are doing something wrong

 

Tue, 12/02/2014 - 14:08 | 5509239 asteroids
asteroids's picture

Key phase is "... about pending orders" (ie frontrunning) , which we all know is illegal except for the "boyz". I guess Citi is no longer part of the club.

Tue, 12/02/2014 - 14:58 | 5509549 outamyeffinway
outamyeffinway's picture

"Da" boyz.

Tue, 12/02/2014 - 13:09 | 5508936 the grateful un...
the grateful unemployed's picture

the fat finger taketh, the fat finger giveth back.

Tue, 12/02/2014 - 13:09 | 5508937 KnuckleDragger-X
KnuckleDragger-X's picture

Something indictable happened, they are weighting down the corpse so that it sinks from sight.

Tue, 12/02/2014 - 13:11 | 5508942 Winston Churchill
Winston Churchill's picture

So, just another day on Fraud Street ?

Tue, 12/02/2014 - 13:11 | 5508946 stant
stant's picture

From lack of liquidity to , that's ok we don't need it anyway now

Tue, 12/02/2014 - 13:13 | 5508952 youngman
youngman's picture

Well its Christmas time...maybe someone felt guilty

Tue, 12/02/2014 - 13:13 | 5508959 SheepDog-One
SheepDog-One's picture

Something stinks on Whore St., but then again what else is new?

Tue, 12/02/2014 - 13:40 | 5509097 I Write Code
I Write Code's picture

Who knows.  Probably got tired of paying 500 Indian programmers to write and run the system that probably didn't work right anyway.  Maybe trying to cover up a bunch of errors.  Probably got an offer from some other system to move their business there and cost them less per year.

Tue, 12/02/2014 - 13:44 | 5509115 vote_libertaria...
vote_libertarian_party's picture

Man I hope this is IEX picking these guys off one by one.

Tue, 12/02/2014 - 14:22 | 5509318 seek
seek's picture

I'm pretty sure it is. "We don't fuck you like the other guys do" is a pretty easy sales pitch.

Tue, 12/02/2014 - 13:44 | 5509124 ekm1
ekm1's picture

Pentagon winning , bank lobby losing

Reminder: citi is the bank where Saudis keep their money. Hence Saudis preapproved this to give warning to others

Tue, 12/02/2014 - 15:01 | 5509578 venturen
venturen's picture

Well they milked the mother higher and are pulling out for the drop! many a financial criminal can now retire at 30 years old before the FED created bubble blows off. You can just feel it 

Tue, 12/02/2014 - 16:51 | 5510123 fibonacci's claus
fibonacci's claus's picture

that's not a dark pool, that's a cesspool, i mean that's a septic tank man. 

Wed, 12/03/2014 - 07:25 | 5511782 redd_green
redd_green's picture

"Increased regulatory scrutiny".  Please, Tylers, youre killing me here.  Heh. 

Do NOT follow this link or you will be banned from the site!