
Regulation
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SEC mulls ways to shed light on dark pools | Reuters
SEC Now Targetting Dark Pools, Indications Of Interests
Zero Hedge has been the subject of much (welcome) ridicule both retail and institutional , for continuing the barrage of Indication Of Interest screens (also: IOIA tag ) and information for the benefit of our readers, which I have been showing consistently over the past month, ever since I had a feeling there is something peculiar in the advertised trade flow pipes. It never hurts to be proven right. Today, the top trading chief of the Securities and Exchange Commission, James Brigagliano, announced that not only will dark liquidity pools (another topic Zero Hedge has discussed skeptically in the past specifically in the context of liquidity) become the focus of a much broader SEC focus (about time), but also automated Indication of Interest notifications have become "a potential source of concern for regulators."SEC votes for Dark Pool regulation | The Economic Populist
Perhaps the danger that the public will completely lose faith in the financial system is spurring a modest push for reforms. Of course we are still only talking about the SEC , which has proven itself totally incompetent at enforcing existing regulations. (Dow Jones)--The U.S. Securities and Exchange Commission unanimously agreed Wednesday to consider three proposals aimed at shedding more light on non-public electronic trading entities including dark pools, which match big stock orders privately. The proposals would require dark pools to make information about an investor's interest in buying or selling a stock available to the public instead of only sharing it with a select group operating with a dark pool.On Oct. 21, the SEC voted unanimously to propose regulations that would increase the transparency of dark pools. The proposed rules have not been released yet by the SEC, but public announcements and congressional testimony by SEC staffers have provided a thumbnail sketch. At the outset, and in the interest of transparency, I hereby disclose that I have no love for dark pools. Nonetheless, from what we can discern so far, the proposed regulation takes aim at the culprit and shoots an innocent bystander. Dark pools are electronic communications networks--or ECNs--that enable participants to quote and trade equities without displaying their quotes to the public markets.
With Dark Pool Regulation, Be Careful What You Wish For
Early Thoughts On SEC Dark Pool Regulation by Advanced Trading
I recently wrote a little piece about CESR, the EU Securities Regulator, and their update to Dark Pools regulations. It got quite a reaction, including feedback from some of the dark pools regulators themselves, who 'corrected' the view that the Best Bid-Offer had been updated by making it clear that nothing had actually changed recently. For example, the document has been updated only to reflect how reference prices are formed in a negotiated trade waiver (Page 11). In fact, the clarification provided for me is that there are various price waivers allowed under MiFID: (c) all orders are submitted for execution/crossing at the midpoint of the primary market BBO or the primary market's Best Bid or Best Offer; or In this case, the trading system formalises negotiated transactions at or within the volume weighted spread, so that trading participants individually agree on the price and volume of the trade before transmitting it to the trading platform.

