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.
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.
“The SEC is considering whether the dark pools need more light,” Schapiro said.
Dark pools allow traders, especially of large blocks of stock, to hide their intentions and avoid moving share prices.
The US has some 40 such venues, but dark pools have also grown in Europe and elsewhere.
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.
This could lead to significant private markets that excluded public investors, she said.