European markets regulators admitted last night that the publication of a list of shares affected by new dark pool caps was delayed.
The European Securities and Markets Authority (Esma) blamed exchanges for suppling "incomplete data", and said it hoped a list could be published in March.
"Based on the analysis performed, ESMA realised that the publication would have resulted in a biased picture covering only a very limited number of instruments and markets," the regulator said in a statement.
The dark pool volume caps were scheduled to kick in on 12 January. Legally, the caps will still come into force despite Esma’s delay – however, without the published data to show which instruments would be affected by the caps, the rule is effectively useless since Esma will not know if a cap has been reached.
Market commentators have said the introduction of the volume caps is when Mifid II, which mostly came into force on 3 January, will truly begin to bite.
“The industry had prepared itself for the caps coming into effect this week, but the postponement does give some breathing room to anyone who wasn’t fully ready," said Duncan Higgins, head of electronic products at equities broker ITG.
“Despite the delay we still expect to see continued growth in Large in Scale (LIS) and periodic auction trading, in preparation for the caps coming into effect on the revised timescales in March.”
The rules have been beset by delays, with Mifid II originally slated to come into force over a year ago.
What is the dark pool volume cap?
Dark pools, where investors can trade without having to reveal what they are buying or selling, were originally designed so that large deals could be executed without immediately affecting the market price of the stock.
But in recent times, dark pools have been increasingly used for smaller trades by asset managers and investors simply seeking privacy.
The second Markets in Financial Instruments Directive, or Mifid II, put a cap on the amount of a stock which can be traded "in the dark". If more than four per cent of a stock is traded in the dark on any particular venue on a 12-month rolling period, or eight per cent market-wide, trading in that stock will be suspended.
Under the new rules, firms which do actually want to trade large volumes of stock can seek a waiver from the regulator, so it will not count towards the volume cap.
They can also use systematic internalisers – investment firms and banks which can execute client orders on their own account – as a more private alternative to "lit-book" trading venues.
Mifid II came into force on 3rd January, with a few wobbles as certain big-name exchanges were granted a last-minute reprieve from "open access" rules.