Nasdaq looks to jump into bank dark pools

Nasdaq looks to jump into bank dark pools

With volumes on lit exchanges in the doldrums, Nasdaq has approached a number of big banks about taking over operation of their dark pools the Wall Street Journal reports.

Citing an interview with Nasdaq chief Robert Greifield, the paper reports that the Exchange plans to seek regulatory permission for the move, which will be pitched as a cost-saving option for large brokers who are being hit hard by depressed volumes and increased regulatory scrutiny.

Banks' "costs are skyrocketing and our job is figuring out how we can help them solve that problem," Greifeld told the Journal.

Using its technology, surveillance software and regulatory expertise, Nasdaq can manage dark pools on behalf of banks, still allowing them to trade at lower prices than they do on exchanges and letting bank customers trade anonymously, the newspaper reported.

Dark pools remain a popular alternative to traditional lit exchanges, affording client anonymity while reducing exchange fees. However, both Citigroup and Wells Fargo have recently exited some markets amid a slowdown in deal volumes and a more onerous regulatory burden.

For Nasdaq, the plan is something of a volte face, as the Exchange has been a prominent campaigner for tighter constraints on broker crossing networks in the face of growing market share losses to private platforms.

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