U.S. regulators are casting some light into dark pools, with a move to make dark pool trading data freely available.
The Financial Industry Regulatory Authority (FINRA) announced Monday that, in an effort to increase market transparency and enhance investor confidence, it has started publishing data for alternative trading systems (ATS), including so-called dark pools, which are trading venues that don’t provide pre-trade transparency.
Currently, trade data for these venues are made available on a real-time basis to investors and the industry through securities information processors (SIPs), but these trades are not attributed to a specific ATS or dark pool. Attributed ATS volume has been provided primarily to the industry, based on voluntary reporting by some (but not all) ATSs, on an aggregate, monthly basis. Under FINRA’s new initiative, it will publish the total volumes by security in each ATS on a weekly basis for free on its website.
“FINRA hopes that providing a clear view of the level of activity handled by these ATSs or ‘dark pools’ will increase market transparency and thereby enhance investor confidence,” said Steven Joachim, executive vice president, transparency services, at FINRA. “Making this information available to both the investing public and market participants provides an unprecedented view into the activity of these highly significant trading venues.”
Each ATS is required to report its weekly aggregate volume information on a security-by-security basis. FINRA will now be publishing the information regarding so-called Tier 1 stocks (such as stocks that comprise the S&P 500 index, the Russell 1000 index and certain exchange-traded products) with a two-week delay. Information on all other stocks and over-the-counter equity securities that are subject to FINRA trade reporting requirements will be released two weeks after that.
On Monday, FINRA published trade data from ATS reports that were filed for the week of May 12 through May 18.