A dark pool is a trading platform that allows investors to trade in large blocks beyond the public quoting system. Dark pools of liquidity have been around for years but, have been increasing in presence in the U.S. equities markets and they are creating concerns that investors will retreat from the public quoting system that most people are familiar with and plunge into the dark pools causing a problem with efficiency and price transparency in the equity market, characteristics that drive a healthy market.
A keynote speech by Eric R Sirri Director for the Division of Trading and Markets of the Securities and Exchange Commission at the Dark Pool Symposium on February 1, 2008 details one of the most fascinating areas of investing--dark pools.
A dark pool makes it possible for an investor to trade with out displaying their full scale of trading interest.
The dark services offered--range from floor brokers to the undisplayed size and order of a trade in an automated electronic communication network(ECN) or an alternative trading system(ATS)
The key that makes it a dark trade is that it is undisplayed.
The main concern about dark pools is that they will become a threat to the public quoting system and cause the markets to be less transparent. Au contraire mon frere! Studies show that the volume of trades have not shifted out of the public quoting system and into the dark side.
Another concern is that dark pool investing platforms will create a problem with efficiency in the equities markets but over the past few years Director Sirri says that efficiency has improved.
http://www.sec.gov/news/speech/2008/spch020108ers.htm
A keynote speech by Eric R Sirri Director for the Division of Trading and Markets of the Securities and Exchange Commission at the Dark Pool Symposium on February 1, 2008 details one of the most fascinating areas of investing--dark pools.
A dark pool makes it possible for an investor to trade with out displaying their full scale of trading interest.
The dark services offered--range from floor brokers to the undisplayed size and order of a trade in an automated electronic communication network(ECN) or an alternative trading system(ATS)
The key that makes it a dark trade is that it is undisplayed.
The main concern about dark pools is that they will become a threat to the public quoting system and cause the markets to be less transparent. Au contraire mon frere! Studies show that the volume of trades have not shifted out of the public quoting system and into the dark side.
Another concern is that dark pool investing platforms will create a problem with efficiency in the equities markets but over the past few years Director Sirri says that efficiency has improved.
http://www.sec.gov/news/speech/2008/spch020108ers.htm
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