| NEW YORK, April 19
NEW YORK, April 19 Credit Suisse AG
has stopped voluntarily disclosing the amount of trading volume
on its Crossfinder platform, the world's largest dark pool,
highlighting the debate over the transparency of U.S. equities
Agency brokerage Rosenblatt Securities and research and
advisory firm Tabb Group, which both publish dark pool reports,
said on Friday that Credit Suisse had stopped providing the
"We're disappointed with Credit Suisse's decision, but
respect that the firm must ultimately do what it believes is
best for its business," said Rosenblatt's Justin Schack.
Credit Suisse spokeswoman Katherine Herring declined to
Dark pools are private electronic trading platforms where
buyers and sellers remain anonymous and their orders are hidden
until executed. The trading venues were originally aimed at
minimizing the market impact of large institutional orders.
A very public debate about the effects of dark pools on U.S.
markets has been playing out over the past few months between
several executives from U.S. exchanges and Credit Suisse's head
of U.S. equity trading, Dan Mathisson.
The stock markets say off-exchange trading has grown 15
percent in the last five years to over 35 percent of all
trading, and that the average dark pool order size has fallen to
levels in line with orders on exchanges.
The growth of off-exchange trading has creating wider
trading spreads, more intraday volatility, and made the market
more opaque, the heads of NYSE Euronext, Nasdaq OMX
Group, and BATS Global Markets argued in a meeting with
the U.S. Securities and Exchange Commission on April 9.
"We don't believe making things even darker is the answer to
the transparency issues presented by dark trading," NYSE
spokesman Rich Adamonis said on Friday. Nasdaq and BATS declined
to comment. Most, but not all, dark pool operators supply the
voluntary data to Rosenblatt and Tabb.
In the meeting with the SEC, the exchanges pointed to rules
implemented in Canada in October requiring dark pools to offer
significant improvement on publicly quoted prices, or to require
a minimum size threshold for off-exchange orders. Australia is
considering similar rules, which have resulted in a 25 percent
decline in the quoted spread in Canada, the exchanges said.
There are around 50 dark pools in the United States and 13
Dark pool proponents say the competition the venues provide
has kept trading prices on exchanges in line, and that if dark
pools did not exist, trading prices would likely be much higher.
Mathisson has also recently pointed out in an editorial in
Traders Magazine that many of the orders executed on exchanges
are "hidden" and closely resemble those on dark pools.
Some of the largest U.S. dark pools are run by banks that
are also some of the exchanges' largest customers. Other dark
pools include Morgan Stanley's MS Pool and Citigroup
Inc's Citi Match.
SEC Chairwoman Mary Jo White, who was sworn in last week,
said in her Senate confirmation hearing in March that the agency
should continue exploring the market effects of dark pools,
along with other issues, including the effects of high-frequency
trading and the proliferation of order types on exchanges.
Tabb's Adam Sussman was not immediately available for
comment, but said on Tabb's website the firm would continue to
estimate the size of off-exchange trading.
"Frankly, our estimate will not be as accurate as it was in
the past, because we will be missing the largest dark pool," he
said. "But we still feel it is important for the industry to
continue to try to measure these numbers. At least until
regulators feel the same and put in place a better way for the
industry to measure the volume and impact of different trading
mechanisms. We are not holding our breath."