In February 2021, more than 16% of trades in UK blue chips were done in dark pools with a higher proportion of FTSE 250 stock flow occurring in dark pools vs. FTSE 100.
For comparison, around 10% of DAX trades have been flowing through dark pools, according to data from Rosenblatt Securities.
The UK has broadly stood by dark pools as a boon to the market; whereas the EU, wary of their opacity, instituted rules back in 2013 that limited trades that could go through dark pools, both in terms of stock names as well as venues. Post-Brexit, these caps will no longer apply in the UK.
High spreads on UK exchanges has been one of the driver of dark pool liquidity in the UK.
Research from the FCA suggests dark trading damages liquidity when volumes exceed 15% of total volume traded.
