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Credit Suisse probed by regulators about dark pools

Swiss bank Credit Suisse on Thursday became the latest major European bank to say it was caught up in an investigation into alternative trading venues known as dark pools.

The bank is one of the biggest players in dark pools, which are broker-run trading venues that let investors trade shares anonymously and only make trading data available afterwards, reducing the chance of information leaking about trade orders.

Credit Suisse headquarters on Paradeplatz in Zurich, Switzerland
Adrian Moser I Bloomberg via Getty Images

"Credit Suisse is responding to inquiries from various governmental and regulatory authorities concerning the operation of its alternative trading systems, and is cooperating with those requests," the Zurich-based bank said in its second-quarter report.

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Credit Suisse, which alluded to the probe last week, did not specify which regulators. A spokesman for the bank didn't elaborate. The bank said it is also among defendants in a class-action suit in the United States alleging its high-frequency trading activities broke securities law.

The lack of transparency around dark pools has drawn the scrutiny of regulators, concerned that brokers and proprietary trading firms that use aggressive high-frequency trading strategies have an unfair advantage over other clients.

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Barclays is facing allegations in the United States that it lied to clients about its dark pool. The bank has urged the dismissal of the lawsuit in New York.

Germany's Deutsche Bank and Switzerland's UBS said on Tuesday they are being probed by U.S. regulators, who are looking into whether broker-run stock exchanges gave an unfair advantage to high-frequency traders.