Any concerns over having a non-robust price formation process in the Australian equity market due to the presence unlit trades should be allayed due to the work of the local regulator, according to the head of a worldwide equity broking firm.
"The big concern ASIC has is ensuring the price formation process has integrity associated with it.are you getting a fair price on the market and that's obviously the concern for retail investors [over unlit trades and dark liquidity]," Liquidnet Australia director Sam MacQueen said.
Specifically the regulator is examining getting the right balance between the efficiency dark liquidity brings and ensuring a fair market price for equities.
MacQueen said investors can take comfort because in his opinion ASIC is doing a good job in this area.
"They've obviously looked at a lot of the different regulatory models from overseas along the way," he said.
Liquidnet Asia managing director Asia Pacific, Lee Porter, said it was evident there was an extensive consultation process happening between regulators in the region.
"Where regulators in the Asia Pacific region are somewhat fortunate is they can actually learn from the experiences of massive amounts of deregulation and competition fragmentation introduced in Europe and the US," he said.
