LONDON, Feb 3 (Reuters) - Investors can save money by trading shares in “dark pools”, a paper from British regulators said on Wednesday after it broadened use of such anonymised dealing in stocks to bolster London’s financial sector in the wake of Brexit. Dark pools, private exchanges for trading securities, are popular with institutional investors who want to execute large transactions without unduly affecting prices. They offer lower costs but are less transparent than traditional “lit” stock exchanges which reveal detailed information about a proposed trade upfront, before it is executed. Britain is keen for the City to remain a competitive global financial hub after access to the European Union was closed off. Now no longer bound by EU rules that have broadly banned much dark pool trading since 2018, Britain’s Financial Conduct Authority (FCA) announced in December that asset managers and other investors could trade near unlimited amounts of shares in the dark. The FCA paper said the use of trading venues like dark pools with lower pre-trade transparency is associated with lower execution costs. Critics of dark pools say they give institutional investors an unfair advantage because it’s hard for ordinary investors to see what’s going on price-wise until a trade has been reported, and that such forums “free ride” on prices created by bourses. Dark pools argue that exchanges just want to go back to days of national monopolies, and want no competition. The FCA paper found that reductions in transaction costs also occur when trading in other ways, such as in “periodic auctions”, when dark trading was banned. Auctions, which are more transparent than dark pools but less so than traditional exchanges, involve buying and selling shares in batches at set times during the trading day. “Importantly, after the ban is lifted, we find participant volume moves back to dark pools, implying perhaps that participants prefer dark pools to periodic auctions when both options are available,” the paper said. “Neither a recent ban on dark pool trading, nor its suspension, significantly affected the transaction costs of investors in the UK equity market.” The European Union introduced “volume cap” curbs on off-exchange trading in 2018. The bloc is reviewing its securities rules and exchanges have lined up to lobby for even tighter controls over dark pools. (Reporting by Huw Jones; Editing by Pravin Char)