Dark pools pose risks to markets

HONG KONG: Financial markets face a "systemic risk" because of the lack of transparency in new trading systems such as dark pools, according to Hong Kong Exchanges & Clearing Ltd Chairman Ronald Arculli.

"The opaqueness has negative implications for corporate governance," Arculli, 70, said during a speech at the Foreign Correspondents' Club in Hong Kong on Wednesday. The platforms "increase price volatility and may add to surveillance difficulties".

Singapore Exchange Ltd and Chi-X Global Inc agreed in August to establish Asia's first exchange-backed dark pool, a type of equity network that doesn't display public quotes. Operators of alternative trading platforms such as Liquidnet Holdings Inc say they allow institutional investors to buy and sell stock without causing price swings.