Dark pool stock trading picks up as Europe debates new curbs

Tue Oct 15, 2013 11:46am EDT
 
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* Dark pool trading on the rise

* Throws fresh focus on MiFID 2 talks

* Lack of data makes regulation hard to design

* Australia experience a potential guide

By Sinead Cruise and Simon Jessop

LONDON, Oct 15 (Reuters) - Fund managers are trading more assets on private exchanges known as dark pools, a growing trend that clashes with regulators' mission to improve financial market transparency.

Dark pools are electronic trading networks that allow investors to buy and sell stocks anonymously, in private deals so other shareholders are not aware of the trades. Some of the details are made public but only after the market has closed.

That contrasts with public exchanges such as the London Stock Exchange where large buyers and sellers are required to identify themselves and stock prices reflect trading activity in real time, throughout the day.

Some investors are shifting business away from public exchanges because they feel these offer little chance to negotiate cheaper bulk buying or to sell without triggering sell-offs that can cut the price they fetch for their assets.   Continued...