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As dark pool debate rages, Credit Suisse Crossfinder records best ever day

30 October 2009  |  8760 views  |  1 drop of water

Despite growing scrutiny from regulators, the popularity of dark pools shows no signs of abating in the US, with Credit Suisse's Crossfinder ATS recording its strongest ever day this week, claiming half a billion shares traded.

The Swiss bank says Crossfinder has experienced steady volume growth this year and is now the number one dark pool in the US. The bank cites research from Rosenblatt Securities which shows the ATS represented 1.55% of US stock trading volume in September.

Crossfinder was launched in 2004 but has seen volumes boosted over the last year after a concerted effort to attract retail investors.

Dark pools that are operated by banks - like Crossfinder - have come under fire recently, with the the World Federation of Exchanges voicing concerns that they do not come under the same scrutiny as platforms run by bourses.

Earlier this month five firms that operate off-exchange venues moved to placate critics by agreeing to print trades made on the venues on the reporting facility Nyse Euronext operates with Finra and display daily activity on Nyse.com. Credit Suisse was not one of the five operators.

However, not all exchanges are hostile to bank-owned platforms. London Stock Exchange CEO Xavier Rolet has defended dark pools in a Bloomberg interview, claiming the help market stability. Rolet says enabling stocks to be traded off-exchange prevents volatility caused by large movements of assets.

Rolet recently pulled the LSE out of the Federation of European Securities Exchanges (FESE), which has joined the criticism aimed at dark pools run by bank.

Facing ever-growing competition from upstart European exchanges, he wants to work with banks, notably on the LSE's Baikal dark pool. According to the Financial Times, the bourse is close to a deal that would see Baikal merged with the bank-owned Turquoise trading platform. No money would change hands but the LSE would hold a 51% controlling stake in the merged entity.

Comments: (1)

A Finextra member
A Finextra member | 31 October, 2009, 15:34

The explosion of Dark Pools was a certain reaction to MiFID. The market has worked best with Dark Pool type market operations and the MiFID objective of transparancy was never a starter. We now find the securities markets turning a full circle back to pre MiFID type trading.

The future solution to what the market wants and what the Government/Regulators want is some hybrid or middle ground structure. Its time that those creating the markets sat down with the Banks and other market users to understand and build a market in Europe that acheives the bussiness and investment goals alike. This might mean some comprimise by all parties

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