Three European banks drawn into US ‘dark pool’ probes.

FT: “UBS, Credit Suisse and Deutsche Bank have been drawn into a deepening probe of banks’ anonymous “dark pool” trading venues, with all three receiving subpoenas from authorities demanding details of their operations.”
“On Tuesday, alongside its second-quarter results, UBS disclosed that it was in contact with a number of authorities over its dark pool and “its securities order routing and execution practices”, while Deutsche Bank revealed that it had received a request relating to high-frequency trading. Credit Suisse, the operator of the world’s largest dark pool trading facility, has received a subpoena from the New York attorney-general, a person familiar with the matter said.
Dark pools – which allow investors to trade large blocks of shares anonymously, without moving the market price against them – have come under fire this year from regulators and lawmakers, who allege that they allow high-frequency traders to gain unfair advantages and trade ahead of other clients.
Deutsche said it was co-operating with regulators, but it did not provide further details. People close to the situation told the Financial Times that the lender had launched an internal review into its alternative trading system. The New York attorney-general sent a subpoena to the bank a few months ago, a person familiar with the matter added.
….Also on Tuesday, UBS revealed that it had been named “among dozens of defendants, including broker dealers, trading exchanges, high-frequency trading firms and dark pool sponsors” in putative class actions pending in a New York federal court, filed on behalf of buyers and sellers of equity securities.
These lawsuits “allege principally that the defendants’ equities order handling practices favoured high-frequency trading firms at the expense of other market participants”, UBS added.
Nonetheless, regulators have become increasingly interested in the topic. New York’s leading regulator last month sued Barclays for allegedly favouring high-frequency traders using its dark pool while misleading institutional investors, allegations that the UK lender vigorously disputes. The SEC is also investigating Barclays, a person close to the investigation said.”