The first weekly US dark pool data published by the Financial Industry Regulatory Authority (FINRA) reflects a market dominated by global broker-dealers.
Yesterday, the US securities regulator published volume data from 42 alternative trading systems (ATSs) for the week commencing 12 May, including many major dark pools. FINRA’s ATS Transparency Data is complied from self-reported data by platform operators under Rule 4552, and is available for all equities. Data for NMS Tier 1 stocks – stocks in the S&P 500 Index, the Russell 1000 Index and certain exchange-trade products – is reported with a two-week delay; NMS Tier 2 and OTC data is reported after a month.
Although a number of dark pool operators have previously provided data on a voluntary basis, this is the first time that the number of shares traded and trades executed in all 42 ATSs licenced to trade equities.
According to the data so far released, the biggest single US dark pools are operated by Barclays and Credit Suisse, which traded 305 million and 374 million shares respectively in the week commencing 12 May. ATSs operated by Bank of America Merrill Lynch, UBS, and Morgan Stanley all traded in excess of 200 million shares in the period concerned. Some brokers hold more than one ATS licence.
While roughly 35% of all equity trading is conducted away from lit exchanges, most estimates suggest that dark pools account for less than half of this amount, giving them collectively a 13-14% share of overall US equity trading volume.
"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. Making this information available to both the investing public and market participants provides an unprecedented view into the activity of these highly significant trading venues," said Steven Joachim, FINRA executive vice president, transparency services.
In the lit markets, overall equity trading in the US fell in May to US$4.17 trillion after reaching a 30-month high of US$5.11 trillion in April, according to Thomson Reuters Equity Market Share Reporter. The May 2014 total also represents a dip from the US$4.63 trillion recorded in May 2013.
NYSE Euronext increased its market share slightly to 25%, with Nasdaq slipping slightly to 21.5%. BATS and Direct Edge accounted for 11.9% and 9.5% of equity trading respectively. A merger between BATS and Direct Edge – which both operate two lit order books – was approved by the Securities and Exchange Commission in January.