The SEBI has made it clear that dark pools cannot be permitted in India for now as there was no transparency in such activities.

Mr J.N. Gupta, Executive Director, SEBI, said at a CII meeting here: All of you who are players in our market know that liquidity in our market is not of high degree. There are very few stocks with high liquidity.

If we allow dark pools to operate, then the bigger deals that happen in our stock exchanges will go to these dark pools. This will make price discovery very difficult in our exchanges.

Dark pool liquidity refers to the trading volume created by institutional orders that are unavailable to the public. The bulk of dark pool liquidity is represented by block trades facilitated away from the central exchanges.

Dark pools are similar to standard markets with similar order types and pricing rules.

However, the liquidity is deliberately not advertised.

Asian regulators and exchanges have been reluctant to grant dark pools a free reign.

This is because stock exchanges in Asia are seen as national assets and regulators are wary to allow dark pools as they lack transparency.

In fact, the technical committee of the International Organisation of Securities Commissions had published a consultation report on dark pools, Mr Gupta pointed out.

The broader issues include dark liquidity, containing principles to assist securities markets authorities in dealing with issues concerning dark liquidity.

Meanwhile, on a query as to why call stock exchanges as public utilities when only 1 per cent of Indian population use such facilities, Mr Gupta said that this 1 per cent mass could become 10 per cent or 20 per cent or even 100 per cent tomorrow.

If I don't care for the investors today, we will never reach a critical mass. This 1 per cent mass is very important for this country.