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By John McCrank
NEW YORK, June 2 (Reuters) - "Dark pools" owned by five bigbanks account for around half of all trades on alternativetrading systems, exchange-like trading platforms that criticsblame for making the markets less transparent, according to aweekly report released on Monday.
The report, by the Financial Industry Regulatory Authority,gives data on ATS trades in the most widely traded U.S.securities from the week of May 12-18. It is significant becauseit is the first time ATSs have been required to disclose theirtrading activity publicly on a security-by-security basis.
The majority of ATSs are "dark pools," anonymous tradingvenues that do not make any trading information available untilafter the trades have been completed. Until now, post-trade ATSdata did not indicate to which firms the trades were attributedor what types of dark pools were most used.
"FINRA hopes that providing a clear view of the level ofactivity handled by these ATSs, or 'dark pools,' will increasemarket transparency and thereby enhance investor confidence,"said Steven Joachim, head of transparency services at FINRA.
Investors can use the information to better determine whereto route their orders, he added.
Nearly 40 percent of stock trades take place away fromtraditional exchanges, up from a little over 15 percent sixyears ago. This has raised concerns that the prices on publicstock exchanges may not reflect true investor demand.
The biggest dark pools were run by Bank of America Corp, Credit Suisse Group AG, Barclays PLC, UBS AG and Morgan Stanley, accountingfor half of the volume on the list of 42 ATSs.
Looking at individual stocks, Sirius XM Holdings Inc had themost shares traded in dark pools, followed by Bank of Americaand SPDR S&P 500 ETF Trust. Some of the most highly traded namesin dark pools included Microsoft Corp, Ford Motor Co, Facebook, and Twitter Inc.
Originally aimed at minimizing the market impact of largeinstitutional orders, most dark pools now have average tradesizes lower than those on public exchanges. The average tradesize in the top five dark pools in the FINRA report was 187shares. The dark pool with the highest average trade size wasTradeweb's Dealerweb, at more than half a million shares.
The data in the report included only stocks in the S&P 500Index, the Russell 1000 Index and certain exchange-tradedproducts, which is released on a two-week delayed basis.Information from the period on all other equities, includingover-the-counter stocks, will be released on a four-week lag. (Reporting by John McCrank; Editing by Dan Grebler)
