FINRA Proposes Rules to Illuminate "Dark Pools"

The Financial Industry Regulatory Authority (FINRA) filed a rule proposal with the Securities and Exchange Commission (SEC or the Commission) on September 30 that would impose reporting requirements on alternative trading systems (ATSs), including dark pools.^[1] Dark pools are a type of ATS in which participants can transact their trades without displaying quotations to the public.^[2] Pursuant to the proposed rules, each ATS must report its aggregate weekly volumes and number of trades on a security-by-security basis to FINRA and indicate which trades take place on ATS platforms. Although the proposed rules will not apply to off-exchange trading venues that are excluded from Regulation ATS requirements,^[3] the rules, if approved by the SEC, will increase publicly available information about these opaque and rapidly growing private markets.