Full article:
http://tinyurl.com/23uh6k9
Excerpts from the official transcript:
Dark Pools: a "dark pool" is a trading system where the price and volume
of orders or quotes are not displayed before a transaction is executed,
after the trade is executed, or any information about the trade is made
public. Dark pools are subject to most regulatory MiFID requirements at
present, except those concerning pre-trade transparency. Dark pools fall
into two categories. The first is trading venues such as regulated
markets and multilateral trading facilities that use waivers from
pre-trade transparency not to display orders or quotes (for example, in
the case of large trades). The second is other types of facility
operated by brokers, such as crossing systems internally matching orders
that are not subject to pre-trade transparency requirements. The
Commission proposes a number of measures that are relevant to both types
of dark pools. For example, in relation to the first type, the
consultation recognises the validity of waivers, but proposes that there
should be greater clarity and legal certainty as to how and when waivers
apply. It proposes that certain waivers should be subject to further
clarification and, in some cases, restrictions. It also proposes that
ESMA should play a greater role in monitoring this area and ensuring the
consistent use of waivers.
High Frequency Trading ("HFT"): the increased use of automated and high
frequency trading has introduced new risks, including those associated
with rogue algorithms causing undue impact on prices, algorithms
reacting to market events or from the increased pressure on trading
systems trying to cope with large numbers of orders. The main Commission
proposals in this area would require that:
>all entities involved in HFT activities should be authorised and
supervised under MiFID (currently an exemption in the directive allows
some participants not be authorised);
>firms involved in all forms of automated trading should have in place
robust risk controls to reduce the possibility of potential system
errors or rogue algorithms;
>firms that allow other automated traders to use their trading systems
to gain access to a market (for example, by sponsored access) should
have in place adequate risk controls and filters to detect errors or
attempts to misuse the facilities; and
>trading venues should strengthen their risk controls and arrangements
to reduce the risk of crashes or breakdowns in their trading systems,
for example, by having in place appropriate "circuit breakers" to halt
or pause trading in the event of disorderly trading movements or errors
generated by automated trading, and trading venues should be required to
stress test their systems to make sure they are resilient.
http://tinyurl.com/23uh6k9
Excerpts from the official transcript:
Dark Pools: a "dark pool" is a trading system where the price and volume
of orders or quotes are not displayed before a transaction is executed,
after the trade is executed, or any information about the trade is made
public. Dark pools are subject to most regulatory MiFID requirements at
present, except those concerning pre-trade transparency. Dark pools fall
into two categories. The first is trading venues such as regulated
markets and multilateral trading facilities that use waivers from
pre-trade transparency not to display orders or quotes (for example, in
the case of large trades). The second is other types of facility
operated by brokers, such as crossing systems internally matching orders
that are not subject to pre-trade transparency requirements. The
Commission proposes a number of measures that are relevant to both types
of dark pools. For example, in relation to the first type, the
consultation recognises the validity of waivers, but proposes that there
should be greater clarity and legal certainty as to how and when waivers
apply. It proposes that certain waivers should be subject to further
clarification and, in some cases, restrictions. It also proposes that
ESMA should play a greater role in monitoring this area and ensuring the
consistent use of waivers.
High Frequency Trading ("HFT"): the increased use of automated and high
frequency trading has introduced new risks, including those associated
with rogue algorithms causing undue impact on prices, algorithms
reacting to market events or from the increased pressure on trading
systems trying to cope with large numbers of orders. The main Commission
proposals in this area would require that:
>all entities involved in HFT activities should be authorised and
supervised under MiFID (currently an exemption in the directive allows
some participants not be authorised);
>firms involved in all forms of automated trading should have in place
robust risk controls to reduce the possibility of potential system
errors or rogue algorithms;
>firms that allow other automated traders to use their trading systems
to gain access to a market (for example, by sponsored access) should
have in place adequate risk controls and filters to detect errors or
attempts to misuse the facilities; and
>trading venues should strengthen their risk controls and arrangements
to reduce the risk of crashes or breakdowns in their trading systems,
for example, by having in place appropriate "circuit breakers" to halt
or pause trading in the event of disorderly trading movements or errors
generated by automated trading, and trading venues should be required to
stress test their systems to make sure they are resilient.
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