More banks drawn into ‘dark pool’ investigation
Scandal engulfed the banking sector again yesterday as the Swiss bank UBS and Deutsche Bank admitted that they had been dragged alongside Barclays into an escalating inquiry into predatory high-frequency traders in so-called “dark pool” stock exchanges.
It comes just a day after Lloyds was savaged by watchdogs for attempting to fix interest rates in an attempt to duck fees due to the taxpayer for participating in the Bank of England’s “special liquidity scheme”. The scheme helped save Lloyds from collapse.
UBS, fined nearly £1bn for its central role in Libor interest rate-fixing, yesterday said it was “responding to inquiries” from US regulators as well as the New York Attorney General, Elliot Schneiderman, over the operation of its “dark pool”.
It also admitted to being named alongside “dozens” of others including high frequency traders, brokers and other “dark pool sponsors”, in a number of class action lawsuits filed by investors in the US.
Deutsche merely said it had received “a number of requests from regulatory authorities related to high-frequency trading” while also being named in lawsuits. It says it is co-operating.
Dark pools are supposed to allow big investors such as pension funds to trade big parcels of stock without other traders knowing what they are doing.
But there is controversy over the role played by high-frequency traders (HFTs) within them. HFTs trade rapidly in and out of shares, sometimes owning them for small fractions of a second, which critics say harms other investors.
Video: 'Dark pools are not new'
The dark pool scandal kicked off when the New York Attorney General claimed Barclays had misled investors using its dark pool into believing they would be protected from HFTs.
Barclays last week hit back, filing a motion to dismiss, but not before trading at its dark pool had dried up, with the bank falling from second to 12th in the market within days.
If the US authorities are able to prove wrongdoing they could demand another batch of mega-fines.
UBS, which reported a 15 per cent rise in second-quarter profit to Sfr792m (£516m), is already embroiled in a battle with the French authorities over alleged tax evasion. Last week a French court demanded it post €1.1bn (£900m) in bail after the bank was placed under formal examination over claims that it had helped launder the proceeds of tax evasion by French citizens. It is fighting the case and has pledged to appeal. But the bank warned that the extent of its involvement in various investigation could “substantially exceed” texisting provisions.
Deutsche also warned that litigation would have “a significant impact” on its future performance as it said net profit fell 29 per cent to €237m in the second three months of 2014.
Getting tough: BofE extends crackdown
The Bank of England could impose even tougher rules on bank bonuses today with new rules allowing bonuses to be clawed back seven years after they were awarded, according to reports. From January, firms supervised by the Prudential Regulation Authority will have to change staff contracts to impose the new regime. The Bank, which floated a six-year clawback in March, will also launch consultations on industry pay and strengthening management accountability among bankers.
Culinary experts in The Netherlands thought it was 'fresh' and 'tasty'
- 1 Marijuana use by teenagers does not result in a lower IQ or worse exam results, study finds
- 2 Watch what happened when food critics were unknowingly served McDonald's
- 3 Jimmy Carr's controversial Oscar Pistorius joke goes too far at the Q Awards
- 4 Australian café owner sparks debate after saying 'No' to having unruly children on premises
- 5 NHS staff banned from drinking tea or coffee on the job because it looks like they're not working hard enough
Renee Zellweger on plastic surgery: 'I'm living a more fulfilling life and I'm thrilled that perhaps it shows'
Kim Jong-un 'purge': Six North Korea officials missing for weeks 'may have been executed'
Diwali: What is the festival of lights – and how is it celebrated around the world?
Nathan Cirillo: Final pictures emerge of soldier moments before he was shot dead by Ottowa gunman
Jimmy Carr's controversial Oscar Pistorius joke goes too far at the Q Awards
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
iJobs Money & Business
£350 - £360 per day: Ashdown Group: SQL Developer with T-SQL, Watford, Hertfor...
120-150k: Accountancy Action: We are looking for an experienced CFO from a min...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...