Dark pools are trading venues which have no pre-trade transparency, hiding and anonymising price and volume of orders.
Dark pools have attracted criticism and claims that they disadvantage traditional investors and distort market pricing. The FCA launched its probe in March 2015.
The review recommended operators of dark pools should do more “to identify and manage conflicts of interest”, including by strengthening policies and procedures for oversight.
It also said they should provide more detail about the “design and operation” of the venues to investors and improve “monitoring of activity in their pools with a focus on operational integrity, best execution, client preferences and unwanted trading activity including market abuse”.
Read more: Dark pools set for probe from City watchdog
“It is vital that we have clean, effective and competitive wholesale financial markets. This review aims to address concerns about the operation of dark pools in the UK,” FCA chief executive Andrew Bailey said.
“Advances in technology have had a huge impact on equity markets which, in turn, give rise to new forms of conduct risk. Similar changes are underway across other products and markets so it is important for boards and senior management to read across, and apply what they have already learned, to rapid changes occurring elsewhere.”