The Focus Now Shifts To Dark Pools
September 23, 2009 by admin
Now that Flash trading is practically a thing of the past, everyone’s attention is shifting to dark pools. And if the just released letter by the World Federation of Exchanges is any indication, dark pools’ days could be comparably numbered.
Dark pools are off-exchange trading venues, or Alternative Trading Systems (ATS) which are largely unregulated, allowing participants to transact in large blocks without disclosing trading intentions until long after the trade has been executed if at all. For the most part dark pools are run by investment banks themselves, with Goldman’s Sigma X being a highly visible (pun intended) example, and one extensively discussed previously on Zero Hedge. The one prevailing characteristic of dark pools is the secrecy of transactions, revealed only to select transacting members. In their letter, the WFE warns that the “heightened opacity of these platforms in many countries inhibits price discovery and may lead to negative outcomes, including increased market volatility.” Read more about dark pools…
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