The lack of data consolidation and established data standards across Europe are increasingly pushing asset managers to direct flows into dark pools as they find it difficult to navigate fragmented European markets, according to research from TradeTech Pulse.
Between 30-40% of asset managers trading flow is now being executed over the counter, although not all asset managers trade in dark pools, the firm says. Further, the majority of the respondents believe they will be trading high volumes in a greater variety of dark pools in a few years time.
Asset managers surveyed were asked to compare quality of information, provision of liquidity and satisfaction of service across a range of different types of off-exchange execution venues. The research found that asset managers have significantly increased the amount of control they have over their trading in the last five years, increasingly deciding where and when to execute orders rather than leaving the decision to their brokers.
TradeTech Pulse says regulators must address the need to more easily aggregate and improve the quality of data and promote a more level playing field across market infrastructures.
The TradeTech Pulse report is titled Trading in the dark, a buy side perspective.
(CG)