SEC to Tighten Regulation for Dark Pools
- The US regulator voted unanimously to enhance the operational transparency and regulatory oversight on dark pools.
The Securities and Exchange Commission announced on Wednesday that it would amend Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( regarding alternative trading systems (ATSs). The changes focus on ATSs that trade stocks on a national securities exchange and aim enhance the operational transparency and regulatory oversight of them.
The regulation, which was passed on Wednesday on a unanimous vote, follows numerous enforcement actions that found some ATSs, otherwise known as dark pools, misled clients about their operations. This included giving special access to high-speed traders.
The changes to Regulation ATS require dark pools, which are private trading platforms run by brokerage firms that don’t disclose pre-trade prices, to file detailed public disclosures on the new Form ATS-N.
This will require dark pools to provide significantly more information than what they are currently obligated to do so and will allow market participants to assess any potential conflicts of interests and risks.
Furthermore, the information provided on the file will inform market participants of their operations. This will include order types and market data on the ATS, plus detail any fees, the dark pool's Execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co and priority procedures, and any procedures to segment orders on the ATS.
According to the statement released by the watchdog, all dark pools will be required to have safeguards and procedures in place to protect their clients confidential trading information. All Forms ATS-N will be publicly available on the SEC’s website.
In addition, as part of the changes, a process for the Commission to review Form ATS-N filings and, after notice, declare a Form ATS-N ineffective will also be established.
Tightening regulations
The amendments to regulation surrounding dark pools is not a huge surprise. This is because, since 2011, banks and brokers have paid more than $229 million in fines to regulators where the wrongdoing involved dark pools.
In addition, the role of dark pools has been growing. According to data from Tabb Group, ATSs accounted for 12.8 percent of average daily trading volume in May this year. With these changes, dark pools are now moving closer to the regulatory requirements of stock exchanges.
Commenting on the amendments, SEC Chairman Jay Clayton said: “I applaud the staff’s retrospective review of our regulation of ATSs. I agree that promoting greater transparency in order interaction, matching, and execution will help empower investors and their intermediaries to find those trading venues that best meet their trading and investing objectives.”
The Securities and Exchange Commission announced on Wednesday that it would amend Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( regarding alternative trading systems (ATSs). The changes focus on ATSs that trade stocks on a national securities exchange and aim enhance the operational transparency and regulatory oversight of them.
The regulation, which was passed on Wednesday on a unanimous vote, follows numerous enforcement actions that found some ATSs, otherwise known as dark pools, misled clients about their operations. This included giving special access to high-speed traders.
The changes to Regulation ATS require dark pools, which are private trading platforms run by brokerage firms that don’t disclose pre-trade prices, to file detailed public disclosures on the new Form ATS-N.
This will require dark pools to provide significantly more information than what they are currently obligated to do so and will allow market participants to assess any potential conflicts of interests and risks.
Furthermore, the information provided on the file will inform market participants of their operations. This will include order types and market data on the ATS, plus detail any fees, the dark pool's Execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co and priority procedures, and any procedures to segment orders on the ATS.
According to the statement released by the watchdog, all dark pools will be required to have safeguards and procedures in place to protect their clients confidential trading information. All Forms ATS-N will be publicly available on the SEC’s website.
In addition, as part of the changes, a process for the Commission to review Form ATS-N filings and, after notice, declare a Form ATS-N ineffective will also be established.
Tightening regulations
The amendments to regulation surrounding dark pools is not a huge surprise. This is because, since 2011, banks and brokers have paid more than $229 million in fines to regulators where the wrongdoing involved dark pools.
In addition, the role of dark pools has been growing. According to data from Tabb Group, ATSs accounted for 12.8 percent of average daily trading volume in May this year. With these changes, dark pools are now moving closer to the regulatory requirements of stock exchanges.
Commenting on the amendments, SEC Chairman Jay Clayton said: “I applaud the staff’s retrospective review of our regulation of ATSs. I agree that promoting greater transparency in order interaction, matching, and execution will help empower investors and their intermediaries to find those trading venues that best meet their trading and investing objectives.”