Wednesday, June 4, 2014

Bank of America misstates dark pool data

Bank of America said it sent incorrect information to a U.S. regulator that has begun disclosing data on private stock trading activity in so-called “dark pools," according to news reports.

The regulator, the Financial Industry Regulatory Authority, on Monday published its first weekly report detailing trading activity on alternative trading systems. Finra said the weekly reports, by shedding light on trading volume in dark pools, will increase transparency and investor confidence in the stock market.

In the initial report, Bank of America’s Instinct X was the largest dark pool, ahead of markets run by Credit Suisse Group AG and Barclays Plc, according to a Bloomberg story. According to the initial report, Instinct X handled 428 million shares, making it the largest U.S. alternative trading system.

Bank of America spokesman Zia Ahmed told Bloomberg that the bank made an error calculating the volume it sent to Finra, the news agency reported Tuesday. The bank sent a correction to Finra and expects the adjustment to cut its volume roughly in half, Ahmed told Bloomberg.

Ahmed said the bank had no comment when reached by the Observer.

The disclosure of the bank's error comes after it reported in April that it miscalculated its capital ratios. That mistake resulted in Bank of America suspending plans to buy back shares and a long-awaited increase in its quarterly dividend, now at 1 cent a share.

Dark pools have received renewed attention and criticism since the publication this year of “Flash Boys” by Michael Lewis. Trading on the private platforms occurs away from traditional stock exchanges.