Wall Street Banks’ Client Trading Practices Examined by UK

(Bloomberg) -- UK financial regulators are examining how top investment banks including Goldman Sachs Group Inc. and Barclays Plc handle client trades.

The Financial Conduct Authority has asked a handful of large institutions for information about their trade processing in recent months, according to people familiar with the matter, who asked not to be named as the probe isn’t public.

Banks and corporate finance firms are legally required to provide the “best possible result” when they carry out trades for clients, including ensuring orders are processed at the optimum price.

The regulator is seeking details on firms’ various approaches to best execution, such as the volume of orders they allocate to trading clients on various trading venues, one of the people said.

The questions have been put to a small group of mostly wholesale banks, as well as some corporate finance firms, the person added. Participants were selected to give the FCA a broad overview of different business models, and not because there were concerns about particular firms, they said. The exercise is at an early stage, with no conclusions at this point.

Spokespeople for Barclays and Goldman Sachs declined to comment.

The regulator hopes to publish its thoughts on best execution in the second quarter of the year. Representatives for other major US and European banks declined to comment.

Some aspects of best execution have been in the crosshairs of global regulators lately, with JPMorgan Chase & Co. fined about $350 million in the US last year for failures in its trade monitoring process.

--With assistance from Harry Wilson.