Brooke Masters: New York law chief turns spotlight on dark pools

The US financial regulatory system can be described as a bowl of spaghetti. Multiple watchdogs with overlapping jurisdictions routinely tangle with each other over how best to keep markets safe and honest.

Financial groups routinely moan about the contradictory requests and soaring compliance costs that result.

This week, Eric Schneiderman, the New York attorney-general, reminded investors why the US system of competitive regulation can sometimes work in their best interests. Mr Schneiderman fired a warning shot on Wednesday into the murky world of dark pools – trading venues where investors buy and sell large blocks of shares anonymously, with prices posted publicly only after deals are done.

He alleged that Barclays’ pool, Barclays LX, favoured high-speed traders while misleading institutional investors.

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