Submissions to the US securities regulator on a proposed alternative trading system (ATS) reporting function have broadly welcomed greater transparency, but queried a suggested fee to recoup costs of the process.
Seven respondents to the Financial Industry Regulatory Authority (FINRA) dark pool reporting proposal, including the buy-side trade body the Investment Company Institute (ICI) and institutional crossing platform Liquidnet, questioned the fee, while saying they were encouraged by moves toward greater off-exchange trading transparency.
Under the proposal, ATSs would report weekly aggregated trading volumes to FINRA and the number of trades by security, which would be made available to the public on a delayed basis.
The information would be made available free of charge to non-professional entities, while others would have to pay a fee. The establishment of a market participant identifier, or MPID, would eventually replace the reporting function.
In its submission letter, Liquidnet proposed the cost of running the reporting function be borne by FINRA members.
“FINRA notes that an important objective of the rule proposal is to enhance the transparency of trading activity in the over-the-counter market,” Liquidnet’s submission read. “Making the data available to all users without cost would be the approach that is most consistent with this objective.”
ICI, similarly welcomed dark pool transparency, but also called for greater clarity on how FINRA’s fee would operate and recommended it offer basic trading volume information free of charge to all users – a point mirrored in comments from recently launched ATS IEX.
The deadline for proposal comments closed on Tuesday, with submissions posted on the website of Securities and Exchange Commission, which will authorise FINRA’s proposal.
Fidelity Investments, which offers asset management services, agreed with ICI’s proposal, but called for the programme to be extended to include non-ATS dark trading.
“The proposal should be expanded to include trade information for other off-exchange executions and this information should be made public in the same manner as proposed for ATS trade information,” the Fidelity submission read.
The Securities Industry and Financial Markets Association, Financial Information Forum and Security Traders Association also provided comment. The latter called for a comment period to open 12 months after an implementation date so empirical evidence could guide any further decisions on the reporting function.