Dark Pool Restrictions Sought In House Committee By NYSE, Nasdaq

Daniel Acker/Bloomberg

Bloomberg News – By Nina Mehta –    June 14, 2012

NYSE Euronext and Nasdaq OMX Group Inc. (NDAQ), the biggest owners of American stock exchanges, are urging U.S. legislators to support changes to rules that caused a proliferation of broker-run markets that draw orders away from public venues.

Dark pools and brokers should be required to provide better prices than those available on exchanges or offer quotes publicly at the best levels, the companies said in a written presentation to staff of the House Committee on Financial Services that Bloomberg obtained. Lawmakers are holding hearings on the structure of U.S. markets in Washington on June 20. Dark pools, unlike exchanges, are private venues that execute orders without displaying bids and offers in advance.

The Securities and Exchange Commission should explain why Regulation ATS, approved in 1998 to integrate alternative venues that compete with exchanges listing stocks into the broader marketplace, “remains sound policy,” NYSE Euronext (NYX) and Nasdaq OMX said. That rule and another set of changes the SEC approved in 2005 overhauled trading and led to the creation of more than four dozen venues that compete with the New York Stock Exchange and Nasdaq. Executives at both companies have pushed for changes to how dark pools operate over the last three years.

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