(Bloomberg) — Barclays Plc will never recover its second-place ranking among U.S. dark pool operators because a lawsuit alleging it lied to customers has permanently damaged its reputation, according to Sanford C. Bernstein Ltd.
Since the bank was sued by New York Attorney General Eric Schneiderman on June 25, its private-trading venue has dropped to the 13th largest and its share of business from top traders has shrunk to 3.8 percent from more than 10 percent, data from the Financial Industry Regulatory Authority and Bernstein show.
Most of my discussions make me believe that this is permanent damage and will be hard for the bank to claw it all back, Chirantan Barua, a London-based analyst for the firm, said in an e-mail. Can they get to 5 percent? Yes. Can they get to 10 percent or more, which was their share before the allegations? Absolutelyno.
Barclays Dark Pool Trading Rises 23% as Bank Recovers From Suit
Barclays is fighting the claims it lied to customers and masked the role of high-frequency traders to boost revenue in its dark pool. This month Britains second-largest lender reiterated its position that the complaint is based on factual and legal errors and should be dismissed.
Will Bowen, a spokesman for Barclays, declined to comment on its ranking. Barua has a market perform rating on the stock.
After volumes rose 23 percent in the week starting Sept. 22, which elevated Barclays to 11th position, the following seven days saw competitors volumes grow faster, relegating it to 13th place with about 134 million shares traded, according toFinra. Before the suit, Barclayss venue had about 312 million shares traded in the last week of June.
UBS AG has overtaken Credit Suisse Group AGs Crossfinder as the bank with the largest dark pool, withFinradata showing 424 million shares exchanged in the week.
The case is New York v. Barclays Capital, 451391-2014, Supreme Court of the State of New York, County of New York.
