European dark multilateral trading facility (MTF) volumes have grown by 32.5% since the beginning of the year, indicating their popularity at a time when regulators are seeking to crack down on the practice.
The first three quarters of 2013 saw total traded volume in dark MTFs reach €322 billion, up from €243 billion in the same period of 2012, according to Thomson Reuters Equity Market Share Reporter.
In September, volumes reached a new monthly high of €41.5 billion, and increase of 58% from €26.24 billion in the September last year.
However, the record volumes come at a time when European regulators are agreeing the final text of the Markets in Financial Instruments Directive (MiFID) II, which are set to curtail dark trading by forcing more trades onto MTFs and lit markets.
Among the proposals in MiFID II are attempts to reduce the use of transparency waivers, which enabling price formation in dark pools and which European politicians have said are widely overused.
While the European Parliament wants trading currently conducted on broker cross networks to transfer to MTFs, which are more tightly regulated, the European Council is pushing for more trading and price formation to take place in lit markets. This forms one of the major points of contention in MiFID II currently under discussion in the trialogue, which is expected to be finalised before the end of 2013.
UBS MTF has been the biggest winner from increased dark trading, with its market sharing increasing from 19.93% in September 2012 to 23.22% last month. The volume traded on the investment bank’s multilateral trading facility has expanded from €5.22 billion to €9.63 billion over the same period.
BATS Chi-X continues to lead the pack in market share, though has lost some ground to UBS MTF over the past year. In September 2012, BATS and Chi-X Europe’s dark order books had a combined market share of 33.66% but this has fallen to 31.99% in 2013.