Unusual dark pool activity was detected today in Citigroup stock. The major news story today for Citigroup and all large banks is that U.S. regulators have circulated an updated draft of the “Volcker Rule” that would further ease its requirements and abandon a proposed new test that had been met with resistance from banks, Reuters’ Pete Schroeder reports, citing two people with knowledge of the matter.
The changes would be a boom for Wall Street banks which were concerned that the proposed changes would create more headaches for the industry. Regulators are seeking to vote in coming weeks on the newer version of the rule, which was introduced following the global financial crisis to prohibit banks that accept taxpayer-insured deposits from engaging in short-term speculative trading, the author says. The recent rewrite of the rule proposed a new test for assessing whether trades are speculative that would focus on the accounting treatment of the instruments traded, the report says.
Another dark pool block order came in during the after hours (AH) market (not pictured above). The AH dark print was for 111,694 shares at $64.83, valued at $7.2 million.
Looking at the options flow in an attempt to determine if the dark pool orders favored bulls or bears, the options flow is bullish.
Citigroup came in 4th on today’s top calls list with 9 call options worth $1.13 million. Notice the last call options contract at 12:48 PM (Pacific), just 12 minutes before market close. It was an Above the Ask call which suggests someone just wanted the position as fast as they could. It was also a sweep order.
The dark pool activity on the price chart seems to suggest that the dark pool trades were sell orders but call options activity does not confirm that. The news of the Volker Rule modification seems to favor the bulls. However, news of Citigroup’s exposure to Hong Kong and what would happen if the Chinese government sends troops into Hong Kong for a brutal crackdown seems to favor the bears.
I can’t make a determination of the intent behind the unusual dark pool orders today in Citigroup stock but it’s something that we should keep our eyes on.