Credit Suisse Embraces the Dark Side of Trading

The debate over dark pools â€" private, electronic stock trading platforms â€" may get more murky.

Credit Suisse, the operator of the nation’s largest dark pool, has told the major industry data providers that it will no longer provide information on how much trading happens in its pool, CrossFinder.

The data providers, Tabb Group and Rosenblatt Securities, provide the only window into what is happening in dark pools, which do not have to follow the same rules as public stock exchanges on reporting trades publicly. In the most recent data from Rosenblatt, CrossFinder was reported as having processed almost 2 percent of all stock trades in February.

Credit Suisse’s decision comes after an escalating public debate about the amount of trading going on away from the public exchanges, and the effect it is having on the stock markets.

The exchanges, the data firms and many trading firms have said that the amount of trading going on in the dark, off the exchanges, now accounts for about 40 percent of all stock trading. The heads of the three largest exchanges visited with regulators last week to complain about the rise in off-exchange trading. Regulators had previously said they are worried about the trend.

Credit Suisse has said the data being used misrepresents the nature of trading both on and off exchanges.

Writing in Traders magazine, the head of Credit Suisse’s dark pool, Dan Mathisson, said that much of the trading happening on the exchanges should be considered dark trading. In his essay, Mr. Mathisson also criticized an article and a separate editorial in The New York Times reporting on the issue.

“After the past decade of market structure changes, the difference between exchange trading and off-exchange trading has blurred to the point where there really isn’t that big a distinction,” he wrote.

The head of Rosenblatt Securities dark pool monitoring, Justin Schack, responded to the Traders piece on Twitter on Thursday, saying, “I like/respect Dan Mathisson but on this issue he is wrong.”

“Bottom line - exchange dark orders are a totally different animal from non-exchange dark pools,” he wrote.

Credit Suisse informed Rosenblatt on Friday that it would no longer be sharing its data with the firm.

Credit Suisse did not immediately respond to comments about the motivation for its decision.

At the Tabb Group’s Web site, Adam Sussman wrote that he was disappointed with Credit Suisse’s decision but understood that the publicity stopped being good for Credit Suisse’s business.

Mr. Sussman wrote that “we still feel it is important for the industry to continue to try to measure these numbers. At least until regulators feel the same and put in place a better way for the industry to measure the volume and impact of different trading mechanisms.”

Richard Adamonis, a spokesman for the New York Stock Exchange, was critical of Credit Suisse and said, “We don’t believe making things even darker is the answer to the transparency issues presented by dark trading.”