The World Federation of Exchanges (WFE) has urged G20 leaders to press for market reform to tackle the uneven playing field and eroded price discovery it claims has been caused by the emergence of alternative trading platforms such as dark pools.
In a letter sent to Mario Draghi, head of the financial stability board at the Bank for International Settlements ahead of the G20 summit in Pittsburgh, the WFE calls for more uniform rules between exchange-traded and "less-regulated" markets.
The WFE warns: "The heightened opacity of certain market operations in many countries inhibits price discovery and may lead to negative outcomes, such as increased volatility."
"Taken together, the combination of the absence of a level playing field between execution venues and decreased market transparency is an unsettling development," says the letter, signed by William Brodsky, chairman of the WFE.
The exchanges call on G20 leaders to agree on ways to avoid "regulatory arbitrage" to ensure market participants do not just go to countries with weak rules.