Earlier quoted context omitted.
your graphic card isn't a stock market.
A market is a market, is it not?
[deleted]
Wall Street’s ‘Private Rooms’
51–60 of 213 posts
Re: Wall Street’s ‘Private Rooms’
#52Do all trades get reported to some agency of the government (including those done in private rooms)?
Do companies themselves know who owns their shares (including those done in private rooms)?
If the answer is no to either or both of the above, doesn't that create all sorts of ownership problems? As an analogy, I'm imagining a country where there is no reliable municipal property registry, and no one knows who owns a particular house. Wouldn't that create chaos?
Re: Wall Street’s ‘Private Rooms’
#53It is not clear to me what nefarious things people believe are going on there that we should be worried about. All the article says is that people are doing things we don't know about, but implies that somehow we should feel not-okay about this. I don't know what's going on in my neighbor's house either, and it could certainly be bad stuff, but that's doesn't mean that it is bad or that I should start spying on them.
Markets are supposed to be decision makers, and having pricing information be public helps firms and other allocators take better decisions. The question at hand is if the flow of information today is so fast that it deters smart decision makers because of other participants who can extract their decisions from them before they can act on them. Wether you believe markets should be more or less opaque should be decided by where you sit on this spectrum imo.
Re: Wall Street’s ‘Private Rooms’
#54I don't quite understand this - are these "rooms" where ownership of shares is tracked separately to how an exchange tracks them? E.g. I own 80% of a company, and I keep the official ownership, but let people buy them from me and from each other, but I keep the record of who owns them?
Re: Wall Street’s ‘Private Rooms’
#55>They’re offering what are dubbed private rooms, gated venues that take the core benefit of a dark pool — the ability to hide big equity deals so they won't impact prices — and add exclusivity, specifying exactly who can partake in any trade.
I'm not sure what all the consternation is about. Even without dark pools you could always do direct trades[1] with a party of your choosing, which is even more private and exclusive. The "private rooms" mentioned in this article just makes this slightly more automated than some trader messaging his buddies on the bloomberg terminal.
[1] https://en.wikipedia.org/wiki/Over-the-counter_(finance)
Re: Wall Street’s ‘Private Rooms’
#56It is not clear to me what nefarious things people believe are going on there that we should be worried about. All the article says is that people are doing things we don't know about, but implies that somehow we should feel not-okay about this. I don't know what's going on in my neighbor's house either, and it could certainly be bad stuff, but that's doesn't mean that it is bad or that I should start spying on them.
If you look up RegNMS the goal is to make public markets fair by having rules that have to be met in order to trade. Dark pools allow participants to 'hide' information that's not public. It is mostly about the order books. If dark pool sell order for 1B of TSLA stock goes on the order book, only other members of the pool get that information. The dark pools are required to still follow RegNMS rules for trade prices,…
>Dark pools allow participants to 'hide' information that's not public. It is mostly about the order books. If dark pool sell order for 1B of TSLA stock goes on the order book, only other members of the pool get that information. The dark pools are required to still follow RegNMS rules for trade prices, but there is an inherent asymmetry in the market information in this case as the dark pool participants can see the public markets and their dark pool in order to make trading decisions.
But traders can easily hide the size of their "true" order by breaking it up into chunks and constantly refilling the order if it's taken? This is basically trading 101. If you want to do a big selloff, you're not going to dump all of that in one order.
Re: Wall Street’s ‘Private Rooms’
#57It is not clear to me what nefarious things people believe are going on there that we should be worried about. All the article says is that people are doing things we don't know about, but implies that somehow we should feel not-okay about this. I don't know what's going on in my neighbor's house either, and it could certainly be bad stuff, but that's doesn't mean that it is bad or that I should start spying on them.
If you look up RegNMS the goal is to make public markets fair by having rules that have to be met in order to trade. Dark pools allow participants to 'hide' information that's not public. It is mostly about the order books. If dark pool sell order for 1B of TSLA stock goes on the order book, only other members of the pool get that information. The dark pools are required to still follow RegNMS rules for trade prices,…
> In your neighbor's house example, it would be like if there was a street market auction for trading cards happening in your neighbor's front yard, but in the house your neighbor and another neighbor had gotten together to trade 100x the average #of cards using the prices they hear from outside, and the people outside only see the deal they made after it's done.
Isn't that how everything is traded? Am I supposed to be outraged that everything I buy retail also exists in a wholesale market?
Re: Wall Street’s ‘Private Rooms’
#58Do all trades get reported to some agency of the government (including those done in private rooms)? Do companies themselves know who owns their shares (including those done in private rooms)? If the answer is no to either or both of the above, doesn't that create all sorts of ownership problems? As an analogy, I'm imagining a country where there is no reliable municipal property registry, and no one knows who owns a…
>As an analogy, I'm imagining a country where there is no reliable municipal property registry, and no one knows who owns a particular house. Wouldn't that create chaos?
That's basically how it works in many (most?) US states. There's no authoritative record of all claims on a property. Land registries exist, but they're not authoritative. Liens can exist without being registered on it, and surface later. Hence the need for "title insurance".
https://www.bitsaboutmoney.com/archive/working-title-insuran...
Re: Wall Street’s ‘Private Rooms’
#59I don't quite understand this - are these "rooms" where ownership of shares is tracked separately to how an exchange tracks them? E.g. I own 80% of a company, and I keep the official ownership, but let people buy them from me and from each other, but I keep the record of who owns them?
It's simply a mechanism to allow trades to happen outside of the lit market, not much to do with ownership tracking. The DTCC still "owns" the shares and the brokers are keeping track of individual ownership. There may be a clearing house to facilitate trades between brokers. Dark pools are available to retail traders via some brokers but of course most are not that easy to get into. Its really no different than trading on the open market but there is less available information.
Re: Wall Street’s ‘Private Rooms’
#60It is not clear to me what nefarious things people believe are going on there that we should be worried about. All the article says is that people are doing things we don't know about, but implies that somehow we should feel not-okay about this. I don't know what's going on in my neighbor's house either, and it could certainly be bad stuff, but that's doesn't mean that it is bad or that I should start spying on them.
It's manipulation by definition. These hidden trades exist to prevent other people from being able to act in their own best interest based on available information. This isn't about what's going on in your neighbor's house. Your neighbor's house is private, markets are public. This is about being at a public auction in the middle of bidding on something when someone else walks up to the crier, whispers a few words in…
Not manipulation as most/all of these execute around the NBBO. Exceptions exist for extreme block trades that may give some price advantage do to the sheer scale but we are not talking about manipulation.
I can easily see the retail price of a good, I can go to a wholesaler or some other holder of this good and ask them if I can buy it at a cheaper price. They might tell me to kick rocks if I don't have volume. Pretty similar to a dark pool. Markets are both private and public everywhere.