There’s widespread dissatisfaction with the level of transparency at dark pools among asset managers and hedge funds, according to a new report by market research firm, the Tabb Group.
Roughly 72 percent of the head traders at 92 asset managers and hedge funds polled by Tabb researchers said they were “dissatisfied with transparency levels in dark pools” and cited “the need for improvements in matching logics and other handling disclosures,” according to a statement.
More than half of the firms interviewed for the report, “US Institutional Equity Trading: Crossroads of Best Execution,” said execution quality was their top 2015 initiative, focusing on “sourcing liquidity and routing and venue analysis,” according to Tabb.
The report investigates a general raising of expectations among asset managers for better order handling transparency, and also investigates how the buy side measures execution quality and “their opinions on what changes to market structure would improve market confidence,” the statement says.
Buy side firms are “not satisfied simply knowing what happened to their order; now they want to know what could or should have happened that would have resulted in a better execution,” says Sayena Mostowfi, head of US equity research at Tabb Group, in a statement.
“One thing’s clear,” Mostowfi adds, “Market structure reviews and buy-side demand for ever-greater transparency are going to produce changes in the market place.”
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