Barclays Capital plans to launch a pan-European dark pool for equities trading in the third quarter, building on the US platform it inherited from its acquisition of Lehman Brothers in 2008.
The UK investment bank says it will implement Lehman's Liquidity Cross (LX) platform in Europe as it bids to take on established equities powerhouses such as Goldman Sachs, Morgan Stanley, Credit Suisse and UBS, each of which operate their own internal crossing networks.
Dark pools currently account for approximately 10% of US equities trading volume, where they have attracted regulatory scrutiny for their opacity. Regulators in Europe - where dark pool volumes are much smaller - are also investigating the phenomonen as they anticipate a surge in their uptake by institutional investors looking to sell large blocks of shares off-exchange.
Barcap says LX will enable users to stipulate the counterparties they interact with, overcoming fears about adverse selection by high frequency traders deploying smart order-routing and algorithms in their quest for alpha.