Securities regulator seeks more transparency at dark pools

A key securities regulator is pushing for more disclosure about trades made in private trading markets called dark pools.

The Financial Industry Regulatory Authority, or FINRA, is set to propose new rules that would bring fresh transparency to so-called alternative trading systems.

Those proposed rules, to be filed with the Securities and Exchange Commission (SEC), would force dark pools to file detailed reports to FINRA each week that disclose how much of each stock a system handles. The rules would also require alternative systems to take on a public identifier to make it easier to track trades.

Rick Ketchum, FINRA’s chief executive, called the effort a “real positive step from a market integrity standpoint” in a video announcing his board’s move. FINRA bills itself as the largest private regulator dealing with firms that do business in the U.S.

FINRA’s move come as dark pools and alternative trading systems have come under more scrutiny, after the pools started taking a bigger share of daily stock trading.

{mosads}According to Bloomberg, alternative pools have accounted for about a third of trading volume in the U.S. this year.

Dark pools allow traders to keep their actions from other traders, and critics, like the SEC, have said the pools can spark market fluctuations and reduce public confidence in the markets.