GLOBAL – Dark pools "hamper market integrity", despite allowing investors to build up positions in shallow equity markets, the asset manager of Norway's NOK3.7trn (€505bn) Pension Fund Global has said.
In a discussion note released by Norges Bank Investment Management (NBIM), the central bank's asset management division also said it was uncertain of the impact proposals for greater pre-trade transparency would have on fixed income markets.
The comments come as a report by the CFA Institute called on regulators to monitor the growth of dark pools and urged traders to reveal more about their activities voluntarily.
In its note, NBIM said: "For us as an investor, there are a number of issues surrounding the use of dark pools.
"On the one hand, dark pools may be an efficient way to build a position in shallow markets.
"On the other hand, the existence of dark pools might impact the price discovery process and hamper market integrity due to possible differences in access to markets and information."
Similarly, the CFA paper, 'Dark pools, internalisation and equity market quality', urged regulators to "evaluate" how dark pools affected price and market liquidity, and monitor their growth.
"Such disclosures would improve transparency and enable all stakeholders to better understand their relative benefits and drawbacks," it said.
Commenting on the recommendation, the CFA's director of capital market policy said: "These measures would enhance market integrity and lead to greater investor confidence in the equity market structure."