PT - JOURNAL ARTICLE AU - Axel Pierron TI - Dark Pools: <em>A Significant Element of the European Cash Equity Ecosystem</em> DP - 2010 Mar 20 TA - Trading PG - 101--107 VI - 2010 IP - 1 4099 - http://guides.pm-research.com/content/2010/1/101.short 4100 - http://guides.pm-research.com/content/2010/1/101.full AB - MiFID has created the roots for significant fragmentation of the European cash equity market with the emergence of competition not only from MTFs and systematic internalizers and dark pools (under price and size waivers) but also through means that were not envisioned by the regulator: crossing networks. The tradeoff between turning to a dark pool or a regulated market is often posed as simply as a choice between latency of execution vs. cost of execution. The reality is a bit different: with the support of technology, traders will increasingly be combining the use of displayed and non-displayed liquidity to maximize liquidity capture and limit information linkage. Dark pools, in their various forms, are just now becoming a significant element of the European cash equity ecosystem.Numerous concerns about the threats dark pools pose to investors have been overestimated. The author acknowledges that currently the European cash equity market has become an environment much more complex to navigate than it was in the pre-MiFID time. However, the reality is that because of the economic meltdown most market participants have not been able to keep pace with the innovation of the past years and the challenges that were created by MiFID. We are today in a market where a few players are able to take advantage of the situation (fragmentation, dark pools, etc.) because they have implemented sophisticated technology, while others are still trying to figure out where and how to invest. Technology is clearly a key differentiator in the European cash equity market.