Posted on 11/09/2011 4:54:26 AM PST by TigerLikesRooster
Tide turns against dark pools
Shanny Basar and Giles Turner
25 Oct 2011
Some of the world’s largest corporates have expressed concern regarding the growth of trading on dark pools, amid an increase in regulatory activity against the trading venues.
A BNY Mellon Global Trends in Investor Relations survey of 650 companies across 53 countries, published today, discovered that a third of respondents believed dark pools “negatively impact global trading markets and that more oversight is necessary.”
Peter Kondrup from drinks company Carlsberg said in the survey: “If you take it from our view point, we believe that it definitely has reduced the transparency for us, as a company, because we have difficulty seeing who’s trading our stock. For us, that definitely not has been an improvement. Rather, the opposite.”
Guy Gresham, New York head of the global investor relations advisory team in BNY Mellon’s depositary receipt group, told Financial News: “We were aware of the concerns amongst issuers but we were surprised at how strong it was and at the number of calls for more regulation.”
Although the financial sector was the largest sector to respond to the BNY Mellon survey (20% of respondents), what may be worrying for dark pool operators is the opposition from companies outside the financial sector.
(Excerpt) Read more at efinancialnews.com ...
I know there are multiple of dark pool markets currently operating. I remember that one dark pool network after another was launched a few years back. Some appear to be cross-continental.
Without trying to seem like a complete Pollyanna, how can dark pools exist without the knowledge and concurrence of the SEC (not the college athletic league)?
There lies the problem, I think.
Dark pools are not necessarily illegal or against SEC regulations, if that’s what you mean. There are regulations in place, but the loopholes and loose definitions provide a legal cover for those trading in the dark pools.
Now, there probably are some trades that are illegal (or at least immoral), but a dark pool is not necessarily illegal. They are just concealed from the public. It is that concealment that leads many to say they should all be made illegal so that the public is aware of all trades.
When the mega-banks and firms are caught investing their client’s funds (like Corzine’s), that is not a dark pool but an illegal investment and should absolutely be prosecuted.
That said, the SEC is worthless when it comes to prosecuting the mega-banks for flagrantly illegal activity.
What’s the advantage of these things and how can we get in on the action?
Mostly, only big boys are allowed in.
One of the problems in our world is that language has become meaningless. As an example “drinks company Carlsberg.” Calrsberg may have diversified, but it is mainly known for one drink, which is called “beer,” and used to be known as what used to be called a brewery.
Trading firms and investment banks may as well resign themselves to the fact that there is a massive new global regulatory scheme waiting for them on the horizon.
Scary, but they brought a lot of it on themselves by the manner in which they’ve scroooood the pooch.
Are you saying that dark pools lie within SEC regs? If so, very interesting.
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