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Nyse makes move to improve dark pool transparency

20 October 2009  |  5095 views  |  0 magnifying glass

With dark pools under the regulatory microscope, Nyse Euronext has struck a deal with five firms behind ATSs and off-exchange market centres to print trades made on the venues on the reporting facility it operates with Finra and display daily activity on Nyse.com.

The exchange says Barclays Capital, Getco, Goldman Sachs Execution & Clearing, Knight Equity Markets and UBS have already volunteered to begin reporting activity on their respective ATSs and off-exchange venues to the facility next month.

Other firms have expressed interest in the initiative and are currently setting up the technology to start participating in the programme over the next few weeks.

The daily trading activity volume published by the Finra/Nyse TRF will be based on trades reported to it, which follow the watchdog's reporting rules. Nyse Euronext says that basing the published volume strictly on trade reports will address some of the problems associated with voluntary reporting by ATSs of their own volume, such as counting both sides of a trade, and counting trades that are routed but not executed.

The move by Nyse and broker-dealers comes as the Securities and Exchanges Commission probes dark pools amid concern over its impact on transparency and market fragmentation. The watchdog is set to meet to discuss the issues tomorrow.

Joseph Mecane, chief administrative officer, US markets, Nyse Euronext, says: "This is an example of Nyse Euronext and the industry working together to develop a positive solution to address the lack of understanding regarding the extent and nature of 'dark pool' trading, which has been a concern for regulators and legislators."

Frank Troise, head, equities electronic product, Barclays Capital, adds: "This initiative is an important step toward the standardization of trade volume reporting across ATS venues. Industry participants will be able to make more informed order placement decisions and thereby improve their execution quality."

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