Senator Schumer Begins Dark Pool Crack Down

WASHINGTON, DC—U.S. Senator Charles E. Schumer (D-NY) will hold a conference call with Duncan Niederauer, CEO of the New York Stock Exchange (NYSE), on Tuesday, October 20, 2009 at 12:30 pm to urge the Securities and Exchange Commission (SEC) to institute a series of reforms to better regulate dark pools. Schumer will release a letter he is sending to SEC Chairwoman Mary Schapiro urging several different measures that would help ensure that dark pools and other nonconventional trading platforms operate on a more level playing field with the traditional stock exchanges, such as NYSE and NASDAQ.

Schumer and Niederauer will call for the SEC to revisit the decade-old Regulation ATS, which first allowed for non-exchanges’ entry onto the scene. Schumer will say that these alternatives can provide healthy competition for the exchanges, and have had significant benefits for retail investors. But now that they play such a central role in our marketplace they should be required to adhere to a more robust regulatory framework and bear their fair share of the costs for maintaining a market infrastructure, now borne disproportionately by exchanges like NYSE and NASDAQ. 

The announcement will come one day before the SEC convenes an open meeting at which it will address several issues related to the operation of dark pools. The agency is expected to consider new rules along the lines of some of the reforms to be suggested by Schumer and Niederauer.