Published On: Wed, Aug 10th, 2011

HK Securities Regulator Restricts HSBC Dark Pool To Professional Investors

Hong Kong’s securities regulator said on its website that banking giant HSBC Holdings PLC (0005.HK) can only offer its dark pool services to professional investors, scuttling the bank’s earlier plans to market the product to retail investors.

The Securities and Futures Commission on Monday added a condition to HSBC’s automated trading services license, originally issued in March, stipulating that the licensee only provide services to professional investors.

HSBC said Tuesday it had shelved its plans to launch Hong Kong’s first-ever dark pool for retail investors but that it was in talks with the city’s regulators, the treasury and others about the role of dark pools in the market.

The U.K.-based bank said it will launch its StockMax dark pool, which was originally marketed to retail customers, for institutional and professional investors only for now.

Dark pools–which let customers anonymously execute large block trades, reducing the risk that information leakage could affect prices as orders are processed–have been popular with institutional investors in Hong Kong. They can also save users money by allowing them to achieve narrower spreads between bid and offer prices.

-By Kate O’Keeffe, Dow Jones Newswires

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