Lawsuit Against Barclays and Exchanges for Favouring HFT Traders Dismissed
by
Andy Traveller
The judge determined that Barclays and seven exchanges were "immune' from allegations that they rigged markets to benefit HFT traders.
A lawsuit that was brought against Barclays and a number of exchanges, in which investors accused the companies of unlawfully advantaging high frequency traders (HFT) by essentially providing them with faster data feeds, has been dismissed by U.S. District Court Judge Jesse Furman in Manhattan.
The case relates to the British bank’s ominous-sounding “dark pool” - an off-exchange venue for anonymously trading securities - and seven exchanges, including Nasdaq, the New York Stock Exchange, BATS Global Markets and the Chicago Stock Exchange. Investors claim that the companies rigged the market by creating "complex order types" and proprietary data feeds that allowed HFT traders to access market data ahead of other investors, thus providing unfair and potentially unlawful advantages.
However, noting that the defendants are self-regulating organisations, Judge Furman determined on Wednesday that the accused were “immune”; that the companies’ actions did not meet the definition of “manipulative acts”, nor could those actions have affected the price at which securities traded in the dark pool.
We are pleased with the court’s thorough and well-reasoned decision dismissing all the allegations in the complaints.
The decision may embolden Barclays, which copped a $2.4 billion fine in May for manipulating foreign exchange rates, and is also defending a similar case brought against it by New York Attorney General Eric Schneiderman.
In a statement, the bank said that it was “pleased with the court’s thorough and well-reasoned decision dismissing all the allegations in the complaints . . . and concluding that the plaintiffs were unable to identify any materially false or misleading statements by Barclays”.
While a lawyer representing several pension fund plaintiffs, Patrick Coughlin, said: "We're disappointed that the judge thought the exchanges deserved immunity as to complex order types. The way they were implemented disadvantaged our clients. We will review the opinion and determine whether to appeal."
Michael Lewis’ book, Flash Boys, put the industry into disrepute last year, exposing how HFT traders skew the market by front running orders placed by investors.
These questions are not for the courts but for commentators, private and semi-public entities and the political branches of government.
However, the industry’s reputation has rebounded somewhat since then, which will only be reinforced by Judge Furman’s decision. In February, the Bank of England also highlighted the fact that HFT firms provide Liquidity and efficiency in markets.
Commenting on the questionable practices by both HFT traders and allegedly complicit trading venues, Judge Furman accepted that "Lewis and the critics of HFT may be right in arguing that it serves no productive purpose and merely allows certain traders to exploit technological inefficiencies in the markets at the expense of other traders."
However, he added that "these questions are not for the courts but for commentators, private and semi-public entities (including stock exchanges) and the political branches of government".
A lawsuit that was brought against Barclays and a number of exchanges, in which investors accused the companies of unlawfully advantaging high frequency traders (HFT) by essentially providing them with faster data feeds, has been dismissed by U.S. District Court Judge Jesse Furman in Manhattan.
The case relates to the British bank’s ominous-sounding “dark pool” - an off-exchange venue for anonymously trading securities - and seven exchanges, including Nasdaq, the New York Stock Exchange, BATS Global Markets and the Chicago Stock Exchange. Investors claim that the companies rigged the market by creating "complex order types" and proprietary data feeds that allowed HFT traders to access market data ahead of other investors, thus providing unfair and potentially unlawful advantages.
However, noting that the defendants are self-regulating organisations, Judge Furman determined on Wednesday that the accused were “immune”; that the companies’ actions did not meet the definition of “manipulative acts”, nor could those actions have affected the price at which securities traded in the dark pool.
We are pleased with the court’s thorough and well-reasoned decision dismissing all the allegations in the complaints.
The decision may embolden Barclays, which copped a $2.4 billion fine in May for manipulating foreign exchange rates, and is also defending a similar case brought against it by New York Attorney General Eric Schneiderman.
In a statement, the bank said that it was “pleased with the court’s thorough and well-reasoned decision dismissing all the allegations in the complaints . . . and concluding that the plaintiffs were unable to identify any materially false or misleading statements by Barclays”.
While a lawyer representing several pension fund plaintiffs, Patrick Coughlin, said: "We're disappointed that the judge thought the exchanges deserved immunity as to complex order types. The way they were implemented disadvantaged our clients. We will review the opinion and determine whether to appeal."
Michael Lewis’ book, Flash Boys, put the industry into disrepute last year, exposing how HFT traders skew the market by front running orders placed by investors.
These questions are not for the courts but for commentators, private and semi-public entities and the political branches of government.
However, the industry’s reputation has rebounded somewhat since then, which will only be reinforced by Judge Furman’s decision. In February, the Bank of England also highlighted the fact that HFT firms provide Liquidity and efficiency in markets.
Commenting on the questionable practices by both HFT traders and allegedly complicit trading venues, Judge Furman accepted that "Lewis and the critics of HFT may be right in arguing that it serves no productive purpose and merely allows certain traders to exploit technological inefficiencies in the markets at the expense of other traders."
However, he added that "these questions are not for the courts but for commentators, private and semi-public entities (including stock exchanges) and the political branches of government".
BGC Group Secures Backing from Global Banks for New $600M Trading Platform
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
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Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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