Tom Young, Nicholas Pettifer and Elizabeth
Singapore launched Asia's first exchange-backed dark pool,
the Chi-X/SGX joint venture, last month. But greater regulation
of the trading pools looks inevitable, as the US proposes new
rules and Europe's Cesr announces it will look into them.
That's fine, as long as regulators understand the differences
between different types of pools and the investors that use
Dark pools allow institutions to buy and sell large blocks
of shares anonymously until trades are complete. But critics
say the pools use prices displayed publicly without
contributing any pricing information of their own. They also
argue that the more successful dark pools are, the less chance
there is of non-users finding buyers or sellers.
Others have criticised the effect pools have on retail
investors that are not privy to the announcements. But Lu Su
Ling, vice-president and head of strategy development at SGX,