ECON committee: first exchange of view on “dark pools”
14 September 2010
Rapporteur Kay Swinburne (UK/ECR) stressed that MiFID was very successful in its objectives but pre- and post-trade transparency issues should now be tackled. Her draft report concludes that quality of market data is not as good as it should be, in particular in the OTC derivatives transactions.
She also highlighted that it is important to understand why transactions move to dark pools. In many cases it is because of a lack of level playing field among trading venues which “obliges” some market players to move to dark pools. Moreover, she pointed out that the overall cost for trading has increased significantly for investors. Swinburne believes that dark pools are necessary, in particular for large institutional investors. The key issue is to persuade those investors that dark pools should be just used when necessary and not for speculative purposes.
Most ECON members suggested waiting until the Commission proposes this week the OTC derivatives legislation in order to check what will be covered under that proposal and what will be left for the MiFID review. Many MEPs also stressed the need to clarify who will be in charge of the supervision of dark pools.
ECON chairwomen Sharon Bowles (UK/ALDE) raised the issue of the rapidly expansion of the new trading technologies which could derivate in manipulative activities and therefore it should be also tackled under the Market Abuse Directive review.
Kay Swinburne concluded that the ECON committee as a group has to develop a single supervisory concept more in detail, although she believes that ESMA should be the authority to make sure that market transparency in trading venues exists.
Next Steps:
27 September - Deadline to table amendments
18 October - Consideration of amendments
26 October - ECON vote
November - Plenary vote
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