London Stock Exchange CEO Xavier Rolet has admitted the bourse's new pan-European MTF and dark pool, Baikal, "might not work" in the face of growing regulatory scrutiny.
When plans for Baikal were first outlined last summer, the project was seen as a major weapon in the LSE's fight to hold off competition from new platforms launched in the wake of MiFID.
Baikal began a phased launch in June but in an interview with the Financial Times Rolet now says there has been a dark pool "regulatory evolution" over the last year.
Only last month it emerged that the FSA has followed the example of its US counterparts and begun an examination of the impact of high-frequency trading and the use of dark pools.
Rolet told the FT that if regulation of dark pools changes it could make Baikal attractive "or totally unattractive".
Another concern for the exchange's new CEO is the failure of other platforms to make money.
Turquoise, the bank-backed MTF which only went live last August, has already been put up for sale as some of its nine bank-owners look to cut losses. Rolet says that if Turquoise is not successful, others will also struggle.
However, despite banks showing a reluctance to fund unsuccessful venues, Rolet says the LSE is still in talks with a group of three to five about taking equity stakes in the platform, which is set to start trading pan-European stocks by November.
Scrutiny threatens success of Baikal, says LSE - FT