FSA looks into high-frequency trading and dark pools
18 August 2009
The review is an exercise in information gathering and is not expected to lead to a formal report.
Knapman has been meeting asset managers and hedge funds over the last month to discuss how the emergence of dark pools and high-frequency trading has affected the equity markets.
Equity markets have seen drastic changes recently, with technological advances increasing the prominence of high-frequency trading and the EU's Markets in Financial Instruments Directive (MiFID) paving the way for a plethora of new electronic trading platforms.
The FSA has recently green-lighted dark pools from Chi-X, Bats, Nasdaq OMX, Nyse Euronext and the LSE. However, earlier this year the regulator deemed Nyfix's Euro Millennium dark pool non-compliant with the latest interpretations of the MiFID rulebook.
Similar concerns in the US recently led to senator Charles Schumer calling on the SEC to ban "flash" trades where users are given an advanced peek at unfilled orders ahead of the wider market.
The US watchdog had already outlined plans to step up its scrutiny of dark pools amid concerns about the risks posed to market transparency and integrity by the proliferation of off-exchange trading venues.
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