Computer Trading and Dark Pools

Bob the Super Hamste writes "CNN Money has an article on computerized trading; specifically, the non-public markets that are often used to execute orders. The company that the article discusses executes 1/8 of all stock trades in the U.S., or about 900 million trades a day. For comparison, the NYSE executes about 700 million trades. The article discusses 'dark pools,' or private markets where quotes aren't disclosed to the broader public markets. If the company is unable to fill an order from within its own dark pool, it will submit the order to the broader public market (13 public exchanges), as well as up to 20 other private dark pools. The quotes offered by the private dark pools, by law, have to be the same or a better quote than those offered on public exchanges. There have been recent questions about whether the quotes provided by dark pools have been the best for customers and there is a current investigation by FINRA into the methods used by market makers and dark pool operators to fill orders."

Comments

lower costs

[roman_mir]

well, this is absolutely normal human behaviour, finding ways to satisfy market demand at a price that is much lower than the official, government regulated, centrally planned (and can be argued government manipulated) market provides.

Whether the government enforces prohibition or imposes high taxes on cigarettes or anything at all for that matter, people find ways to find the products at a cheaper price and the government 'cracks down' on that because it wants a much bigger cut (be it from taxes and or from sales through the only legal, government supported monopolistic markets, which is the case here).

What does it cost to comply with all government regulations to run a stock exchange? Supposedly simple question, how much does the compliance with the Patriot Act cost?

Re:lower costs

[roman_mir]

The government isn't just regulating stock markets because they want a cut.

- correct, there is a secondary reason, which is buying votes of the idiots, that believe that the government must regulate everything because some of them are corner cases, and some of them got conned and because 1-10% may lead to some loss or there is a con artist in 5% cases, now 100% of businesses must suffer through regulations.

Of-course it's worse for things like Patriot Act, all of a sudden all freedoms are suspended indefinitely, and useful idiots, like the ones I am normally 'conversing' here with believe that it should be that way.

The fraud is not a problem that is worthy of destroying freedoms of all people, fraud has always existed and WITH government intervention, fraud is much more pronounced and severe and of much greater magnitude. Too big to fail does not happen in the free market, it requires enormous amount of money being printed by the Fed, enormous amounts of backstops, various fake insurances by the government, programs that push for lower and lower lending standards, artificially low interest rates.

AAA debt is only marked AAA because of the monopoly status that government grants to the rating agencies, the moment one of those agencies even dares to suggest that the gov't is NOT AAA in fact, it gets investigated, licenses get suspended (Egan Jones), there is only corruption in government, government exists to corrupt.

Politicians manipulate the markets, in fact the biggest insider traders are politicians, be it Congressmen or Senators or their staff members. The real corruption happens at the behest of the government officials and departments, not despite but because of it.