The Financial Services Authority (FSA), the UK’s financial regulator, has said it will not oppose the introduction of a new dark order type by the London Stock Exchange (LSE).
The LSE is to introduce a hidden limit order, which will allow anonymous orders to interact with visible orders on its lit book, in the first quarter of 2009. The LSE is currently in discussion with the FSA to finalise details of the new order type, according to the exchange.
A spokesperson from the FSA told theTRADEnews.com that no restrictions would be placed on dark trading facilities that comply with the European Commission’s MiFID legislation, introduced on 1 November 2007.
However, the FSA spokesperson confirmed that pre- and post-trade transparency has been a significant focus for the UK regulator since MiFID came into force.
Anonymous or ‘dark’ trading facilities are often used by institutional investors to trade large blocks of stock without causing market impact. Industry estimates put the proportion of US equity trading conduct in dark pools at between 15 and 20%.