Securities executives are trying to determine if the 12-year-old decision to narrow the price increments for American stock trading has harmed investors, according to two people with knowledge of the matter.
Institutional dark pool Liquidnet executed its largest ever principal trade in a US-listed security in October, exchanging US$150 million in shares at the touch between two asset managers.
The lights are dimming in Europe’s financial markets. Just as it has in the U.S., an increasing amount of Europe’s stock trading is migrating off public exchanges and into private venues known (unfortunately for them) as dark pools, where trades aren’t made public and prices aren’t reported immediately. Reliable data on dark pools can be tough to come by. The biggest one in the U.S., Credit Suisse’s Crossfinder, stopped reporting its data in April. Still, the available evidence points to a recent spike in the amount of trading that’s going off in the dark in Europe.
The New York Stock Exchange's new boss, Jeffrey Sprecher , said he plans to reorient the exchange back toward individuals and away from the high-frequency traders who play an increasingly large role in the financial markets.
The New York Stock Exchange (NYSE) last week filed to launch a block trading segment to execute institutional exchange orders in the dark, but experts suggest it may struggle to shift market share from existing dark venues.
Authorities want a clearer understanding of what goes on in dark pools. American, Australian and Canadian regulators have set out requirements for increased transparency and responsibility for these trading venues. Now Europe is set to clamp down on their operation under a revision of the Markets in Financial Instruments Directive (MiFID).
Since the flash crash on 6 May 2010, several studies have tried to explain what happened, which securities were most affected, and who or what is to blame for the sudden extreme volatility.
Scott Burrill, CFA, Partner and Managing Director, and Xiang Li, PhD, Director and Head of Quantitative Research at Rosenblatt Securities Inc, argue the case for the effectiveness of a volume based TCA framework.
As US dark volumes continue to rise, regulators must be wary of balancing alternative trading system (ATS) initiatives with buy-side demand for efficient execution, suggests Joe Gawronski, president and COO of brokerage Rosenblatt Securities.
A pilot programme exploring the impact of rebates on broker order routing could improve buy-side execution, but participants must be wary of unintended consequences, such as sending more flow off-exchange.