| NEW YORK, June 2
NEW YORK, June 2 "Dark pools" owned by five big
banks account for around half of all trades on alternative
trading systems, exchange-like trading platforms that critics
blame for making the markets less transparent, according to a
weekly report released on Monday.
The report, by the Financial Industry Regulatory Authority,
gives data on ATS trades in the most widely traded U.S.
securities from the week of May 12-18. It is significant because
it is the first time ATSs have been required to disclose their
trading activity publicly on a security-by-security basis.
The majority of ATSs are "dark pools," anonymous trading
venues that do not make any trading information available until
after the trades have been completed. Until now, post-trade ATS
data did not indicate to which firms the trades were attributed
or what types of dark pools were most used.
"FINRA hopes that providing a clear view of the level of
activity handled by these ATSs, or 'dark pools,' will increase
market transparency and thereby enhance investor confidence,"
said Steven Joachim, head of transparency services at FINRA.
Investors can use the information to better determine where
to route their orders, he added.
Nearly 40 percent of stock trades take place away from
traditional exchanges, up from a little over 15 percent six
years ago. This has raised concerns that the prices on public
stock exchanges may not reflect true investor demand.
The biggest dark pools were run by Bank of America Corp
, Credit Suisse Group AG, Barclays PLC
, UBS AG and Morgan Stanley, accounting
for half of the volume on the list of 42 ATSs.
Looking at individual stocks, Sirius XM Holdings Inc had the
most shares traded in dark pools, followed by Bank of America
and SPDR S&P 500 ETF Trust. Some of the most highly traded names
in dark pools included Microsoft Corp, Ford Motor Co
, Facebook, and Twitter Inc.
Originally aimed at minimizing the market impact of large
institutional orders, most dark pools now have average trade
sizes lower than those on public exchanges. The average trade
size in the top five dark pools in the FINRA report was 187
shares. The dark pool with the highest average trade size was
Tradeweb's Dealerweb, at more than half a million shares.
The data in the report included only stocks in the S&P 500
Index, the Russell 1000 Index and certain exchange-traded
products, which is released on a two-week delayed basis.
Information from the period on all other equities, including
over-the-counter stocks, will be released on a four-week lag.
(Reporting by John McCrank; Editing by Dan Grebler)