Dark trading regulation in Australia, and Canada, has had some unintended consequences that might not bode well for market integrity, according to Dr Sean Foley from the University of Sydney.

Speaking this week at a Centre for International Finance and Regulation event, Dr Foley said that while the Australian and Canadian rules have resulted in a reduction of dark trading overall, they have not increased the average size of dark trades. Nor have they improved depth on lit markets.

Most worryingly, dark transaction costs increased in both markets. Just goes to show that regulation is often an experiment conducted on live markets.

You can read Sean’s paper in full here.