Trading in Financial Instruments: European Parliament dark pools report adopted 09.11.10
Brussels, 9th November 2010 -- The European Parliament's economics committee today adopted a report by European Conservatives and Reformists economics spokesman Kay Swinburne MEP into regulation of trading in financial instruments such as 'dark pools'.
Dr Swinburne's report accepts that, while the 2004 Markets in Financial Instruments directive (MiFID) has benefited the EU's financial markets through increased competition and provided a number of benefits to investors, it has coincided with a huge increase in the use of technology and an unprecedented increase in the speed of trading. She warns that technological advances require more sustainable legislation to reduce levels of systemic risk in the functioning of the markets, ensure fair competition and ensure market integrity.
The parliament's position will now be taken into account when the commission brings forward reviews of the MiFID and Market Abuse Directives (MAD).
After the vote Dr Swinburne said:
"Today the Parliament has clearly shown its concern for the integrity of our financial markets, and is asking the fundamental question: is the market still serving the needs of long term investors and businesses?
"At the moment, there is a worrying lack of information readily available regarding the Over-The-Counter space, on broker-operated dark pools and on high frequency trading strategies. The European Parliament is asking for much more information to be made available and collected in a usable form.
"The only way to really understand whether the market is functioning correctly is for regulators to have enough information to see what is going on in the market. When practices like quote stuffing and spoofing are alleged to be taking place alongside supposed barracuda trading strategies which seem to be forcing long term investors into trading within dark pools it suggests that some kind of market dysfunction may be taking place.
"Hopefully, the Commission and Committee of European Securities Regulators will now use my report to take a long hard look at their reviews of Market Abuse Directive and MiFID and find answers to the questions I have raised."