The Financial Conduct Authority has confirmed the timeline for a thematic review on “conflicts of interests” in dark pools.
The regulator said the review is designed to assess the risks around dark pools, noting that the research will run from the second quarter of 2015 until the first quarter of 2016.
It follows the announcement last month that it is to conduct a market study of the investment and corporate banking sector in 2015, although there were few details on the exact terms of reference released today
Michael Horan, director of Trading Services at BNY Mellon-owned Pershing, said the parameters of the FCA review would all depend on what the regulator considers the term ‘dark pools’ to mean.
He said: “Many people use it as an overarching term for MTF dark books and broker crossing networks (dark books run by the investment banks), so I’m not sure which ones they are referring to.
“It could be referring to some dark pool operators allowing HFT firms into their pools and not informing their clients. Dark pools do have a purpose, but we have to make sure that they are trustworthy.”
News of a UK market review of dark pools comes after Barclays lost a bid to dismiss a lawsuit in the US last month, where it has been accused of misleading customers of its dark pool for financial gain.
New York attorney general Eric Schneiderman has been pursuing the bank over how it marketed its dark pool and the level of transparency the bank offered customers.