FINRA makes dark-pool data public

FINRA has begun providing data indicating the activity levels in each alternative trading system (ATS), including all market facilities commonly called “dark pools.”

This important information will shed light on the securities that are traded in each “dark pool,” which occurs away from traditional stock exchanges. While the trades in these facilities are made available on a real-time basis to investors and professionals today through securities information processors (SIPs), these trades are not attributed to a specific ATS or “dark pool.”

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Under FINRA’s new transparency initiative, the public will now be able to see the total shares traded each week by security in each ATS or “dark pool.” This data will be provided to the non-professional investing public free of charge and is available through FINRA’s website. ATS account for a significant percentage of total OTC trading in exchange-listed equities in the United States. Currently over 30% of the total National Market System volume of shares traded occurs over the counter.

Each ATS is required to report to FINRA its weekly aggregate volume information on a security-by-security basis. FINRA will publish the information regarding Tier 1 NMS stocks (i.e., stocks in the S&P 500 Index, the Russell 1000 Index and certain ETPs) on a two-week delayed basis. Information on all other NMS stocks and OTC equity securities subject to FINRA trade reporting requirements will be released two weeks following the publication of information for the Tier 1 NMS stocks.

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The information from ATS reports that FINRA is making available today were filed for the week of May 12 through May 18, 2014. The ATS reports were due to FINRA by May 28, 2014. Under a typical reporting scenario (i.e., no federal holidays), each ATS is required to report the information for a given week seven business days following the week. FINRA will publish the information regarding Tier 1 NMS stocks no earlier than the following Monday.

Prior to FINRA making this data generally available, ATS volume has been provided primarily to professionals, based on voluntary reporting by some (but not all) ATS, on an aggregate, monthly basis. FINRA’s collection of the data under its rule is designed to ensure that the data reported is complete and accurate, and by making the data available on a weekly, symbol-by-symbol basis, provides a new level of transparency that may be reviewed and studied by non-professional and professional traders, academics and regulators.

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The staff of Advisor.ca have been covering news for financial advisors since 1998.