With the SEC’s meeting on equity market structure just last week, it is no surprise that many of the issues addressed by the regulators were also top of mind at today’s SIFMA Dark Pool Symposium. ITG’s Head of Liquidity Management, Hitesh Mittal, participated on the “End-Users and Execution” panel, which addressed not only the initiatives outlined in the recent SEC concept release, but more importantly, how those policies might affect investors.

The panel, which was moderated by Brett Redfearn of JP Morgan and included representatives from Fidelity, Morgan Stanley, Alliance Bernstein, and Rosenblatt, was kicked off with a fundamental question: has the quality of the markets been impacted negatively by the increased volume of trading in dark pools? The panel unanimously agreed that the markets are functioning as well as they ever had and that dark liquidity is benefiting investors. However, most on the panel agreed that there should be distinctions between the quality and characteristics of various dark pools, specifically those that solicit orders and send out IOIs. Hitesh outlined three key benefits of dark pools for investors:

1) less information leakage
2) price improvement
3) less adverse selection than in the displayed markets.

Another controversial topic set off by the SEC’s recent concept release involved the issue of real-time disclosure to the tape. Although some felt that real-time reporting would help investors assess the performance of each trading venue, the majority believed that real-time trade reporting and disclosure of trading venues could deter some asset managers from sending large orders in dark pools, ultimately decreasing liquidity. The majority of the panel did not see any upside to real-time disclosure and preferred that the regulators adopt either delayed or end-of-day reporting.