Tom sat on a panel with senior industry commentators from State Street Global Advisors, ITG, Credit Suisse, Barclays and Convergex to discuss the evolution of dark pool structures.
One key takeaway: There was a general consensus that more trading will go to the lit markets as a result of the proposed caps and less will be executed in dark pools. However, there is a great deal of innovation in this space and the recently announced BATS Chi-x auction service will be neither dark nor lit. The sales trader role is becoming more important and it was estimated that around 50% of trading is executed via this channel.
Recent events and MiFID II have undermined the value proposition of dark pools. It was also agreed that U.S. regulators have been very active with dark pools over the last two years, being very prescriptive in their approach and listening to the key stakeholders, in contrast to the EU regulators who have not.
Tom was applauded for the trial he initiated in the U.S. with reduced market access fees and the audience was disappointed that other venues did not join in. Finally, it was agreed by the panel that a consolidated tape for the industry would help the suppliers be more innovative with trading system development and analytical services.
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