(Pictured: Phillip Weinberg)
The legal action by the New York Attorney General’s Office against Barclays Bank over management of its dark pool of liquidity for clients has ramifications around the world, according to Phillip Weinberg, chief executive of Australian trade execution firm BestEx.
The NY Attorney General is alleging that Barclays systematically biased its dark pool in favour of its high frequency trading (HFT) clients and against institutional clients. Barclays mad misrepresentations and even gave HFT clients details of the institutions on the other side of trades, according to the writ delivered late last month.
Weinberg said: “While ASIC appears to have done a good job at calming the market in relation to market integrity, the conflicts in broker order routing are the biggest problem in the Australian market.
“This issue costs investors far more than HFT or dark pools per se. The Barclays matter goes straight to that point and is very relevant in Australia.”
Weinberg believes that a big part of the solution is for clients and institutional investors to engage more with their brokers and be more proactive and discerning in how they route their orders.
He has written a short paper on the subject. Read it here.