John At The Center

Exchanges are under relentless pressure to find the best ways to accommodate new types of traders beyond the simple trading flow from brokers on behalf of large institutional clients.

That explains why some exchanges have started by offering – or planning to offer – their own dark pool-like platforms.

But Larry Leibowitz, chief operating officer at NYSE Euronext, said that the sheer number of dark pools available could lead to confusion among investors and sees a role to consolidate. “We are the natural aggregators of these dark pools,” he said.

Alfred Eskandar is head of corporate strategy group at Liquidnet, one of the largest dark pools containing equities from 29 markets around the world.

He says that the benefit of dark pools – being able to hide your full trading intention – are not being realised because of the way dark pools have been designed. That has limited the ability of dark pools to supply sufficient liquidity for large orders.

He believes that will lead to a consolidation of dark pools – which may drive some into the arms of exchanges as well.

Some analysts suggest the dark pool providers could eventually join together, combining their individual dark pools and apply for exchange status, something exchanges are obviously keen to avoid.

http://www.ft.com/cms/s/0/bab73b9a-4147-11dd-9661-0000779fd2ac.html?nclick_check=1