CITY watchdog the Financial Services Authority (FSA) yesterday launched a probe into how UK equity markets are used, with a special focus on the way in which so-called “dark pools” and “high frequency” traders operate.
The news comes as financial regulators around the globe come under pressure to step up scrutiny on the industry, especially as competition over trading technology rapidly develops.
“Dark pool” trading is a facility which allows big blocks of shares to traded at prices which aren’t posted until after the trade.
And “high frequency” trading is done on high-tech computer programmes, allowing breakneck speed trading.
The study is being run by staff at the FSA, led by chairman Adair Turner, and City veteran Henry Knapman of UBS. The US has already launched its own investigation.