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Ronald Arculli, chairman of the Hong Kong Exchanges and Clearing, stresses that the market regulator should consider the the risks related to the "dark pool" trading system because they allow investors to trade without their identities and trading volume being revealed, reports the South China Morning Post.

"HKEx is not worried about the competition from 'dark pools'," Arculli told the Post. "But we are concerned about the systemic risks, as they have no central clearing to cover the counterparty risk."

The Post explains that "investors who trade through the HKEx are guaranteed their trades will be settled. Counterparty risk is eliminated because the exchange's central clearing and settlement system (CCASS) works like a counterparty for all investors when matching trades."

But Glenn Lesko, chief executive of Instinet Asia-Pacific, things Arculli's argument is "ridiculous," adding that by trading in the dark, institutional investors "avoid market impact costs as well as frictional costs involved in executing a large trade in smaller pieces."

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