Six of the world’s largest investment bank who operate “dark pools of liquidity” (i.e. electronic trading venues and internal crossing networks that do not display a public order book) have announced that they will now be providing details of how many shares are being transacted on those networks on a daily basis.

Deutsche Bank, Citigroup, UBS, Credit Suisse, Morgan Stanley and JP Morgan Cazenove have all agreed to send details of their dark pool trades to Markit, the Financial Information Services company, who will then collate the information and publish it the following day.

This move will go a long way to placating those who have been calling for an outright ban on dark pool trading, because if nothing else it will give other market participants an idea of the trade volumes that are passing through these networks. This has been one of their main complaints, i.e. the fact that nobody knows what exactly is going on with dark liquidity. This move will provide more transparency, while still enabling large investors to keep their identities and their order flows private when actually trading on dark pools.

Up until now, nobody has really known the total amount of volume traded on these private execution venues. Estimates range from anywhere between one percent and forty percent of total equity trade volume, which is a pretty wide range! Although banks have to report all of their OTC (over-the-counter) transactions, until now there has been no requirement to split out the volume transacted on their dark crossing networks for reporting purposes.

According to the High Frequency Trading Review, the SEC recently published a Concept Release document asking for feedback on the structure of the US equities markets. Greater transparency is one of the things that pretty much everyone seems to agree is needed. So it looks as if the major players are finally starting to sit up and take notice.