With the ongoing investigation of fraud at the Barclays dark pool, alternative trading systems have once again found themselves under the spot light. These off-exchange venues that were a topic of concern in Michael Lewis’s infamous book ‘flash boys’ are once again under scrutiny by regulators in the United States and Europe. While trading in the dark in Asia has not been as pronounced as other financial centres, market institutions and participants in the region are carefully monitoring what approach will be taken by both the SEC and ESMA. The APAC region poses a unique challenge to dark pool operators as markets across the continent have different trading rules with some more conducive to ATSs than others. A fundamental rethink of dark pool trading is critical in improving both market transparency and liquidity amidst an evolving regulatory environment.
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