NEW YORK (Reuters) - An industry-funded watchdog for the U.S. securities industry is seeking to bolster its monitoring of stock transactions in “dark pools” at a time when the alternative trading systems have come under greater scrutiny.
The Financial Industry Regulatory Authority (FINRA) will seek approval from the Securities and Exchange Commission to obtain information on trading volumes, on a weekly basis, from dark pools and all other alternative trading systems, known as ATS.
FINRA also plans to require each ATS to use a unique identifier when it reports order or trade information, the watchdog said in a statement on its website.
The agency’s board authorized FINRA to submit the proposed rules to the SEC after a meeting on Thursday.
The rules would require ATS to report total trading volume, by security, to FINRA, which would then post that information on its website. Currently there is no public dissemination of ATS data.
FINRA Chief Executive Rick Ketchum said in a video that the rules will greatly increase information about ATS trading in general, and in particular about dark pools - private trading systems.
Ketchum said that dark pools have raised significant concerns among investors who are trying to understand them better and the trading that occurs on them.
In April, the chief executives of three U.S. exchanges met with regulators in Washington to express concerns about increased trading taking place away from public markets.
The exchanges have long argued that the rise of off-exchange trading distorts prices in the public market and contributes to less transparent trading activity.
Off-exchange trading has approached almost 40 percent of U.S. stock activity trading volume at times this year, according to industry consultants. Dark pools account for about one-third of that activity.
Reporting by Herbert Lash; Editing by Lisa Shumaker