views

SEC chief Schapiro warns of dark pools clampdown

THE INCREASING use of dark pools, or venues where stock trades are hidden from public view, is a growing concern for regulators, the chairman of the US Securities and Exchange Commission (SEC) said yesterday.<br /><br />Mary Schapiro told a conference in Basel there are legitimate reasons for traders to maintain anonymity, but dark pools may lower the quality of publicly available information.<br /><br />&ldquo;The SEC is considering whether the dark pools need more light,&rdquo; Schapiro said.<br /><br />Dark pools allow traders, especially of large blocks of stock, to hide their intentions and avoid moving share prices.<br /><br />The US has some 40 such venues, but dark pools have also grown in Europe and elsewhere.<br /><br />Schapiro said some pools were not dark to all market participants but rather transmitted electronic messages to select individuals that could convey valuable information about their available liquidity.<br /><br />This could lead to significant private markets that excluded public investors, she said.