"Arbitrary" Dark Pool Caps Leading to Increase in Block Trading and Innovation

Innovation and large-in-scale trading are set to be given a boost as the industry seeks ways to combat the dark pool double volume caps under Mifid II.

dark pools
The caps placed on dark-pool trading have become a lightening rod across the industry for a shift toward block trading as liquidity continues to fragment ahead of Mifid II.

One of the more contentious elements of Mifid II, the restrictions on the use of dark-pool trading waivers, will ultimately lead to more technology innovation and large-in-scale (LIS) or block trading, according to panelists at this year’s TradeTech conference in Paris.

The double-volume cap states that the use of two waivers, the reference price waiver and the negotiated trade waiver, will be subjected to limits — 4% of European trading on any one trading venue and 8% of European trading on

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