IOSCO makes dark liquidity recommendations: IOSCO is consulting on principles for regulators to help them control dark pools. The recommendations are designed to:
- minimise any adverse impact of using dark pools on price discovery;
- mitigate the effects of any potential fragmentation of information and liquidity;
- help give regulators information to monitor the use of dark pools and dark orders;
- help investors get sufficient information to understand how orders will be handled and executed; and
- increase the monitoring of dark orders and dark pools so regulation can respond to the risks.
The principles cover:
- transparency to market participants and issuers;
- priority of transparent orders;
- reporting to regulators;
- information available to market participants about dark pools and dark orders; and
- regulation of the development of dark pools and dark orders.
IOSCO wants comments by 28 January 2011.