Institutional traders keep a wary eye on dark pools.

Although dark pools’ share of total U.S. equity volume held steady at 14% from 2014 to 2015, the results of the Greenwich Associates  2015 Trade Desk Optimization Study suggest that institutional trading desks are approaching alternative trading systems with more caution and, at times, even skepticism.

“Traders are less likely to accept at face value the quality of execution they receive from dark pools,” says John Colon, Managing Director at Greenwich Associates, and author of a new report, What Lies Beneath: A Deep Dive Into U.S. Equity Dark Pool Perceptions.

When asked about the pros and cons of dark pools, year-over-year study participants focused more on the negatives and less on the positives.  Thirty-five percent of responses related to avoiding particular dark pools due to the risk of exposure to “toxic” order flows, up from 23% two years ago.  Similarly study participants are less inclined to cite specific dark pools as standing out for delivering price improvement, with positive citations falling from 30% of responses to 17%.

Given that many of recent negative headlines about dark pools centered on impropriety in bulge-bracket dark pools, it makes sense that the bigger banks have suffered the lion’s share of the reputational hit. In terms of dark pools that traders avoid, the bulge-bracket pools were identified 41% of the time as compared with all other ATSs at 30%. The silver lining for these bulge dark pools is that volumes are surprisingly stable, despite the negative press.

Beyond the headlines, the buy-side has taken steps to be more proactive in tracking the quality of liquidity they receive and dark pool operators are sharing more information about their ATSs and offering better controls to the buy side to help alleviate concerns.

“ATS owners understand that although the nature of trading off-exchange is structured purposefully to minimize information leakage about their trades, the will lose order flow if they don’t improve traders’ comfort levels with the trading venue,” Colon says.