A plan to require alternative trading systems (ATS) to report weekly volumes to regulators will save asset managers time and improve execution quality, according to Nanette Buziak, head of equity trading for ING Investment Management.
Under the plan, the Financial Industry Regulatory Authority (FINRA) will from late April gather and publish data from dark pools registered as ATSs on a security-by-security basis, showing asset managers which pools attract liquidity in different names.
“With the number of ATS’s that are out there today, I am constantly having to vet these venues,” Buziak said.
“Having the hard data would assist me in knowing who is real and who is not, otherwise I end up having to waste time hosting meetings and reviewing systems that end up having little to no volume,” she said.
There are currently around 50 trading venues executing US equities, the bulk of which are ATSs. Under the FINRA plan, which gained approval from the Securities and Exchange Commission in February, ATSs will submit weekly volume reports that are published on a delayed basis – two weeks for liquid instruments and four weeks for illiquid instruments – to avoid information leakage.
Buziak said overall, the plan was positive for the buy-side, although there may be issues around double counting of dark pool executions, as some count both sides of a trade in volume reports.
“Greater transparency of ATS volumes will lead to tangible buy-side benefits as we will finally be able to have hard data on where the real volumes are going,” she said.