US authorities fine UBS’ dark pool $14.4m

 
Tim Wallace
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“The UBS dark pool was not a level playing field for all customers” (Source: Getty)
Swiss bank UBS’ dark pool was fined $14.4m (£9.5m) last night after it was accused of failing to tell all clients about a type of product on offer.

The Securities and Exchanges Commission (SEC) said the bank pitched the order type almost exclusively to market-makers and high-frequency traders, without letting other participants in the trading system know it existed.

The order type let the firms trade securities in increments of less than one cent, breaking regulations.

UBS also failed to tell users about a restriction which stopped some trades being executed against high frequency traders using UBS algorithms, the SEC said.

“The UBS dark pool was not a level playing field for all customers and did not operate as advertised,” said the SEC’s Andrew Ceresney.

UBS did not admit or deny wrongdoing in the settlement.

“UBS is pleased to resolve charges by the SEC arising from historical shortcomings in the operation of its ATS,” said a spokesperson.

“The issues that led to these charges were remedied in mid-2012, and the firm has updated and enhanced its supervisory and operational procedures.”

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