Banks reveal extent of 'dark pool' trading

Six big investment banks published trading volumes for their "dark pools" for the first time yesterday, showing them as a tiny fraction of the market and not the major hidden rivals to stock exchanges that some argue.

Citi, Credit Suisse, Deutsche Bank, JP Morgan Cazenove, Morgan Stanley and UBS together executed €596m (£513m) of equity trades from 15 countries on their automated crossing systems on Friday, according to Markit data.

That accounted for about 0.4 per cent of all types of cash equity trades in Europe and 1.6 per cent of all over-the-counter (OTC) trades reported on the Markit BOAT service that day, according to Thomson Reuters data.

Dark pools are electronic platforms that allow would-be buyers and sellers of large orders of shares to avoid revealing pre-trade information and signalling their intentions to the rest of the market.

Bankers argue that for the bulk of OTC trades they act purely as dealers, using their own money or share inventories to take one or another side, or they act in a non-automated way to match buyers and sellers for big blocks of stock.