Wall Street's main trade group set forth a proposal for reforming U.S. equity markets this week, focusing mainly on eliminating time advantages in data dissemination, reigning in the number of trading venues and eliminating or greatly reducing exchange fees that the group says are distorting pricing and executions.
Several unintended consequences can be expected to emerge from the wider tick sized pilot proposed by the Securities and Exchange Commission, including more dark trading and less liquidity, according to market structure analysis by KCG Holdings, Inc.
The reports of an exodus of banks and asset managers from the Barclays LX dark pool following the charges filed against it by New York authorities were confirmed by just-released industry data. The number of shares traded on the venue fell by 37 percent in the week the charges were announced, according to data from the Financial Industry Regulatory Authority.
Growing numbers of banks and asset managers are reportedly withdrawing from Barclays LX dark pool following last week's lawsuit by New York Attorney General Eric Schneiderman. The suit alleges that Barclays deliberately misled investors about the participation of "predatory" high-frequency traders in the venue.
Barclays LX has climbed to become one of the top dark pools by total trades, but the firm was so intent on getting to that spot that it deliberately defrauded and misled clients, New York Attorney General Eric Schneiderman alleges in a lawsuit against the firm announced Wednesday.
Broker payments such as payment-for-order flow and maker-taker pricing took top billing in a Senate subcommittee hearing this week with senators expressing concerns that the payments present conflicts of interest.
The Senate Permanent Subcommittee on Investigations is holding a hearing today on the topic of "Conflicts of Interest, Investor Loss of Confidence, and High Speed Trading in U.S. Stock Markets." The six panelists scheduled to testify will probably put forth a variety of opinions. On blogs, media sites and newspaper columns, others are already weighing in.
IEX, the marketplace that rose to fame with the publication of the Michael Lewis book "Flash Boys," has hired a former top Securities and Exchange Commission official to help wind its way through the complicated regulatory process of applying to become an exchange. IEX has reportedly been talking to investors for the last couple of months to raise money to expand operations.
The Financial Industry Regulatory Authority (Finra) announced Monday that it was making available data on the activity level of all alternative trading systems (ATSs), including dark pools, to the public for free. Credit Suisse's Crossfinder, Barclays' LX and UBS' dark pool were the three largest for the week, Finra's first weekly report showed.
Tripleshot, the block trading company that launched trading operations last fall, has received a patent for its block trading methodology. The patented block trading system addresses the issue of executing large block trades without tipping off the market-- a market challenge that was highlighted in the recent Michael Lewis best-seller "Flash Boys."