Six Banks To Disclose Dark Pool Trading

Six banks in Europe are set to report details to regulators of dark pool trading, a practice that is at the center of the financial reform in the U.S., Europe and the U.K. following the most severe economic crisis since the Great Depression.

Dark pool trading is a practice that allows investors to buy and sell securities apart from the regulated exchanges to avoid having to disclose positions, and starting today the banks will report European equity trades to Markit Ltd. Once the data is processed, the aggregated trading volume will be released.

The banks that will begin disclosing dark pool trading data at the end of each day include UBS AG (NYSE: UBS), Citigroup Inc. (NYSE: C), Deutsche Bank Ag (NYSE: DB), Morgan Stanley (NYSE: MS), JPMorgan Cazenove Ltd. (NYSE: JPM) and Credit Suisse AG (NYSE: CS).

The regulators in Europe are debating over how much dark pool trading truly exists, as the Financial Services Authority in the U.K. has said the practice accounts for 1.25 percent of total trades, while the Federation of European Securities Exchanges believes that the total is closer to 40 percent.

The undisclosed information on volumes and pricing of securities in the dark pools has resulted in an issue for regulators trying to gauge the market innovation that results from the practice.

Markit Ltd. Will report its findings the following afternoon after information is gathered each trading day on the activities contained within dark pool trading.

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