THE CHIEF of the London Stock Exchange, Xavier Rolet, warned new regulation to
control controversial “dark pools” could lead to an exodus of businesses from the City.
Dark pools, electronic trading platforms that offer anonymous trading away from major stock exchanges, have come under fire from regulators and other European bourses.
Opponents say the method of exchange risks undermining the integrity of the European market structure, yet the chief executive of the London Stock Exchange warned tighter regulation could act as a “straitjacket” on the City.
He said: “I am concerned an essentially continental European model is going to be imposed on London. It will force a straitjacket of European ideas on what constitutes proper institutional transactions.
“It’s going to hamstring London and reduce the ability of the City to serve big corporate clients that have been the hallmark of the City for the last few years.
“If you prevent participants from transacting in the way you need to… that might not necessarily be the appropriate venue and all that will happen is the businesses will go elsewhere.”
Rolet said new Mifid II regulations, which will update the European directive that controls trading in dark pools, threatened London.
“We care very deeply about what benefits London, not just the Stock Exchange. It’s what’s good for the ecosystem. Let’s grow the pie so we can benefit too,” he said. The ongoing European Commission consultation it says is currently looking at “how to limit derogations from the current” Mifid framework.