It looks imminent that SEC will clamp down on the dark part of the of dark pools. As of 2009 there are more than 30 dark pools operating in US markets. Together they add up to 7.2% of trading volume. The concern that SEC has is that actionable IOIs (indication of interest) are not in public domain. The IOIs are revealed only to select group of market participants who are part of the dark pool. They are also circulated to other dark pools thereby creating a private secret network away from the public domain. However SEC also thinks that that dark pool trading may be required for large block orders – which might sway the public indices and thus increase execution and opportunity costs of the trade. However for smaller orders, especially below $200000, SEC thinks it is detrimental and so they should be disclosed.

So in summary SEC proposal is as below:

– Actionable IOIs must be treated like quotations and are subjected to the same disclosure rules as those that apply to quotations
– All ATS venues must disclose the best prices to public domain even when their total trading volume in the stock is  just above 0.25% (Currently it is 5%)
– All post trade messages to the clearing agency should contain the identity of the ATS venue instead of just naming it an OTC trade