The U.S. Securities and Exchange Commission is proposing new measures intended to increase transparency of alternative trading systems known as “dark pools”.

To make trading through dark pools more transparent, the SEC’s proposals would generally require that information about an investor’s interest in buying or selling a stock be made available to the public instead of just a select group operating with a dark pool. The proposals also would require that dark pools publicly identify that it was their pool that executed the trade.

“Today’s proposals are intended to prevent the development of a two-tiered market in access to pricing information, further promote displayed liquidity, and enhance transparency of trade information,” said James Brigagliano, co-acting director of the division of trading and markets.

In its proposals, the commission is also seeking public comment and data on certain issues relating to dark pools. The proposals are out for a 90-day comment period.

Earlier this fall the Canadian Securities Administrators and the Investment Industry Regulatory Organization of Canada published their own concept paper concerning various issues related to dark pools. That paper didn’t make any specific rule proposals, instead it sought feedback on the issues regulators are considering. They have also promised to hold a roundtable to discuss these issues once the comments on the paper have been received (the deadline is Dec. 29).

Separately, the Nasdaq OMX Group, Inc. announced it will introduce enhancements to its trade reporting that will allow firms to separately report dark pool trading activity. The new functionality will be effective in mid-November, it said.

“We recognized that the industry would benefit from separate reporting of market share statistics for participants operating ATS dark pools. If the regulatory environment becomes more demanding for dark pools, Nasdaq OMX will be at the forefront to help firms meet their reporting obligations,” said Eric Noll, executive vice president of Nasdaq OMX Transaction Services.

IE