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Exclusive: SEC eyes test that may lead to shift away from ’dark pools’


Exclusive: SEC eyes test that may lead to shift away from ’dark pools’

By Sarah N. Lynch and John McCrank WASHINGTON/NEW YORK (Reuters) - U.S. securities regulators are considering testing a proposed reform that could drive business to major stock exchanges and away from alternative trading venues such as "dark pools" that critics say may be hurting investors by reducing the quality of pricing. The proposal, which has so far only been discussed among staff involved in policymaking at the U.S. Securities and Exchange Commission, could limit how much trading occurs inside brokerages and in dark pools, according to people familiar with the matter. They say that the amount of trading being done in the "dark" means that publicly quoted prices for stocks on exchanges may no longer properly reflect where the market is, meaning that investors may not be getting the best prices for their trades. The measure under consideration, known as a "trade-at" rule, has long been sought after by exchanges like Nasdaq OMX and the New York Stock Exchange as a way to win back market share against off-exchange competitors such as Credit Suisse's Crossfinder, one of the largest dark pools in the United States.


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