A report by a trading group comprising five money managers called on dark-pool operators to improve transparency and disclosure, avoid conflicts of interest and update their best-execution policies.
The report by the Healthy Markets Association also recommended that investors reward those trading venues that are more transparent and have fewer conflicts.
The report, “Dark Side of the Pools: What Investors Should Learn from Regulators’ Actions,” said the Securities and Exchange Commission and other regulators focus more on disclosure issues rather than unfair practices. While it suggests the SEC do more to regulate such venues, it’s ultimately investors’ responsibility to monitor the dark pools in which they trade, and leverage their order flow to get more information on how they are handled and executed, the report said.
“Investors and their brokers must revise their own practices and expectations to better protect themselves from dark-pool abuses,” the report said.
The full report is available on the association’s website.
HMA’s members are Brandes Investment Partners, Janus Capital Group, Boston Co. Asset Management, Quantitative Investment Management and Southeastern Asset Management.
