Singapore Exchange has a participating "Dark Pool" platform, Chi-East, which is set to launch this season, providing trading services for Hong Kong, Japan, Australia, and Singapore securities. Ned Phillips, CEO of Chi-East, stated that some clients are interested in trading Hong Kong stocks through Chi-East, which will report transactions to the Hong Kong Stock Exchange (0388) in accordance with Hong Kong's regulatory requirements and will settle through Hong Kong's clearing companies.
Trading of Hong Kong stocks will be reported in accordance with the requirements of the Hong Kong Securities and Futures Commission.
Ned Phillips mentioned in an interview that Chi-East's clients are primarily investment banks, and they choose to trade through the dark pool because it allows for anonymous matching, reducing the impact of client trading actions on the market and other investors, while the spreads involved are narrower, which can lower transaction costs. Although there are concerns about the lack of transparency in dark pool trading, Ned Phillips stated that unlike other dark pool platforms, Chi-East will later release matched transaction volume and price data through data providers such as Bloomberg and Thomson Reuters to enhance trading transparency.
Ned Phillips indicated that it is currently difficult to estimate how many Hong Kong stocks will be traded through Chi-East, but he estimates that the proportion of dark pool trading in the Asia-Pacific region will gradually increase. According to data from the Hong Kong Securities and Futures Commission, dark pool trading is not very active in Hong Kong, with about 13 institutions providing dark pool services, accounting for less than 3% of the total trading volume of Hong Kong stocks.
Releasing matched transaction data to increase transparency.
In addition to questioning the transparency of dark pools, the market also believes that dark pools contribute to "market fragmentation," where large funds trade "in the dark" through dark pools, while retail investors trade "in the light" through exchanges, giving large investors a significant advantage. Europe and the United States currently do not have specific regulatory systems for dark pools, but are actively researching them. For example, six major investment banks, including UBS, Citigroup, Deutsche Bank, Morgan Stanley, JPMorgan Chase, and Credit Suisse, recently announced that they will report dark pool trading to European regulators in the future. The United States has previously proposed a bill that requires dark pool trading for individual stocks to be publicly quoted if the proportion exceeds 0.25%, effectively forcing dark pool trading to be disclosed.
