Trading in the dark, a buy side perspective sets out to a provide a more accurate picture of how large, medium and small asset managers across the continent have traded over the period between 2007 and 2011, how and why they use OTC and dark pool alternatives and, in their view, the critical issues that they need addressing to improve their trading environment. The results are interesting and sometimes surprising and will be used by the asset management trading community for benchmarking.
Asset managers were asked to compare quality of information, provision of liquidity and satisfaction of service across a range of different types of off-exchange execution venues. The research found that asset managers have significantly increased the amount of control they have over their trading in the last 5 years, increasingly deciding where and when to execute orders rather than leaving this decision to their brokers.
The research report concludes that if regulators are concerned about dark pools, they must first address the need to more easily aggregate and improve the quality of data. Secondly they must continue to promote a more level playing field across market infrastructure that will lower costs for all participants, accelerate consolidation and reduce the current incentives for market participants to excessively create and use large numbers of dark pools and crossing networks.