The committee has adopted the European Conservatives and Reformists economics spokesman Kay Swinburne's report and its position will now be "taken into account" when the EC reviews the Markets in Financial Instruments directive (MiFID)and Market Abuse Directives (MAD).

Swinburne says that, while MiFID has benefited the EU's financial markets through increased competition, it has coincided with a huge increase in the use of technology and speed of trading.

She warns that technological advances require more sustainable legislation to reduce levels of systemic risk and ensure fair competition and market integrity.

"At the moment, there is a worrying lack of information readily available regarding the over-the-counter space, on broker-operated dark pools and on high frequency trading strategies. The European Parliament is asking for much more information to be made available and collected in a usable form," says the MEP.

"The only way to really understand whether the market is functioning correctly is for regulators to have enough information to see what is going on in the market. When practices like quote stuffing and spoofing are alleged to be taking place alongside supposed barracuda trading strategies which seem to be forcing long term investors into trading within dark pools it suggests that some kind of market dysfunction may be taking place."

The EC is expected to publish plans for its proposed MiFID overhaul early next year, with dark pools and high-frequency trading high on the agenda.

In the US, the Securities and Exchange Committee is also examining the issue. The agency yesterday moved to ban stub quotes and also suggested fine-tuning circuit breakers, which are used to stop trading in stocks undergoing extreme volatility. SEC chief Mary Schapiro on Monday also said that the watchdog is examining proposals to mandate risk controls in algorithms that would force them to slow down during rapidly fluctuating market conditions.