We're getting all too accustomed to new exchange or alternatives trading system launches. From Nasdaq OMX's new PSX exchange to the BATS Y Exchange to the Direct Edge offerings, we're seeing new exchanges launched to capture niche markets with tweaked fee structures. This has been accompanied by ever more nuanced dark pool offerings. Advanced Trading asks a timely question: Are there now too many exchanges? The magazine counts 12 stock exchanges and at least 45 dark pools.

This has become a huge regulatory issue. It's certainly easy to make a case for too much fragmentation and, in a sense, too many options for traders, which makes price discovery harder. Themis Trading, a major critic of some trading  practices, has called for a moratorium on approvals of new market centers and ATSs until the SEC has figured out the May 6 Flash Crash, notes Advanced Trading.

It's unclear exactly what regulators think about all of this, but some have hinted that fragmentation has gone too far. The issue now for some is what to do about it. That's a very complex undertaking. No one wants to be seen as anticompetitive or a job killer. One might argue that the free market offers some sort of solution.

If some of these niche exchanges do not generate the number hoped for, perhaps they will be shuttered or consolidated. That may be pie-in-the-sky thinking. But it is an easier solution than massive restructuring. That said, we'll likely get some tinkering toward the goal of exposing more dark orders to light. Whether we'll get a fundamental re-thinking of market structure by regulators seems doubtful, but you never know.

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