Anonymous trading platforms, known as "dark pools," are valuable marketplace tools, according to former SEC Commissioner Paul Atkins.
"Folks who have large orders, who have size in the market, their orders actually move prices, and so that's why they seek other venues to trade," explained Atkins.
He said dark pools enhance liquidity and help price discovery mechanisms in the marketplace, because ultimately all prices are reported.
Hedge fund regulation
When asked whether the SEC would be an effective regulator of hedge funds, Atkins said he had doubts.
“I think what they really need to concentrate on are advisers that affect retail investors, and that’s mutual funds,” said Atkins. “That’s really where the SEC’s strength is, and hedge funds and other things that really cater to sophisticated investors is a completely different animal.”
More news from CNBC.com:
- Fourteen Charged in Widening Wall St. Insider Trading Case
- Productivity Jumps Higher as Job Losses Show Drop
- NYSE, Citigroup Among NYC Firms Getting Flu Vaccine