25 July 2016
Find out more

European Parliament backs dark pool regulation

09 November 2010  |  8492 views  |  1 mifid

The European Parliament's economics committee has backed a report calling for tougher regulation of dark pools and high-frequency trading.

The committee has adopted the European Conservatives and Reformists economics spokesman Kay Swinburne's report and its position will now be "taken into account" when the EC reviews the Markets in Financial Instruments directive (MiFID)and Market Abuse Directives (MAD).

Swinburne says that, while MiFID has benefited the EU's financial markets through increased competition, it has coincided with a huge increase in the use of technology and speed of trading.

She warns that technological advances require more sustainable legislation to reduce levels of systemic risk and ensure fair competition and market integrity.

"At the moment, there is a worrying lack of information readily available regarding the over-the-counter space, on broker-operated dark pools and on high frequency trading strategies. The European Parliament is asking for much more information to be made available and collected in a usable form," says the MEP.

"The only way to really understand whether the market is functioning correctly is for regulators to have enough information to see what is going on in the market. When practices like quote stuffing and spoofing are alleged to be taking place alongside supposed barracuda trading strategies which seem to be forcing long term investors into trading within dark pools it suggests that some kind of market dysfunction may be taking place."

The EC is expected to publish plans for its proposed MiFID overhaul early next year, with dark pools and high-frequency trading high on the agenda.

In the US, the Securities and Exchange Committee is also examining the issue. The agency yesterday moved to ban stub quotes and also suggested fine-tuning circuit breakers, which are used to stop trading in stocks undergoing extreme volatility. SEC chief Mary Schapiro on Monday also said that the watchdog is examining proposals to mandate risk controls in algorithms that would force them to slow down during rapidly fluctuating market conditions.

Comments: (1)

A Finextra member
A Finextra member | 10 November, 2010, 17:57

This has to be good for the investor but hardly great news for brokers. Could this bring about a move towards Stock Exchanges away from MTFs and the like?

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Iosco sets out plans for dark pool transparency

Iosco sets out plans for dark pool transparency

28 October 2010  |  7271 views  |  0 comments
Bloomberg to shed light on dark pool order flow

Bloomberg to shed light on dark pool order flow

31 August 2010  |  10370 views  |  1 comments
MEPs nod through Swift data sharing deal

MEPs nod through Swift data sharing deal

08 July 2010  |  8608 views  |  1 comments
SEC begins overhaul of US equity markets with ban on direct market access

SEC begins overhaul of US equity markets with ban on direct market access

14 January 2010  |  10536 views  |  0 comments
SEC to extend dark pool probe

SEC to extend dark pool probe

09 October 2009  |  7184 views  |  0 comments
Exchanges call on G20 to tackle dark pools

Exchanges call on G20 to tackle dark pools

23 September 2009  |  7569 views  |  0 comments
EU's MiFID review to look at dark pools

EU's MiFID review to look at dark pools

21 September 2009  |  11327 views  |  0 comments
SEC bids to shed light on dark pools

SEC bids to shed light on dark pools

19 June 2009  |  8476 views  |  0 comments

Related company news

 
Visit capgemini.comFind out moreVisit VocaLink.com

Who is commenting?

A Finextra member Finextra Member Commented on: UK startups get Brexit...
A Finextra member Finextra Member Commented on: Apps crush internet fo...

Top topics

Most viewed Most shared
MasterCard agrees £700m VocaLink acquisitionMasterCard agrees £700m VocaLink acqu...
8991 views 14 comments | 32 tweets | 37 linkedin
satelliteContactless Bitcoin startup Plutus Tap &am...
8865 views comments | 9 tweets | 3 linkedin
hands typing furiouslyWhat Every FinTech CEO Should Know About R...
8653 views 0 | 16 tweets | 8 linkedin
hands typing furiouslyBanking on IoT: Security in the Internet o...
8474 views 3 | 20 tweets | 7 linkedin
Santander doubles down on fintech fundSantander doubles down on fintech fund
7854 views comments | 22 tweets | 28 linkedin

Featured job


Brussels (Belgium) or Paris (France)

Find your next job