SEC approves new ‘dark pool’ disclosures
New disclosures would be required for alternative trading systems known as “dark pools” under proposals unanimously approved this morning by the Securities and Exchange Commission.
New disclosures would be required for alternative trading systems known as “dark pools” under proposals unanimously approved this morning by the Securities and Exchange Commission.
The largest dark pools are private trading systems sponsored by securities firms to execute the orders of their customers and their own proprietary orders outside of public markets.
These dark pools have grown in recent years to represent a significant source of liquidity in U.S.-listed stocks. The proposals approved today by the five-member commission focus on dark pools that transmit electronic messages to a limited group of market participants. The messages signal that the dark pool has an interest in buying or selling a security.
“Participants in these private pools have access to information about a trade which other investors are denied,” SEC chairman Mary Schapiro said in a statement. “What’s more, these participants are able to use and rely upon the prices provided by the publicly displayed markets, without contributing information on their own,” she said.
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