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Wall Street’s ‘Private Rooms’

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Re: Wall Street’s ‘Private Rooms’

#101

Post by gosub100 »

ajsnigrutin wrote: post #20

Ban high frequency trading, ban instant transactions (put them on hold for some time before buying/selling (hours minmum, longer for larger quantities), make the held transactions public, and tax the profits on a time-owned scale. This would turn "investments" into investments again... you really believe that company XY will do something good? Buy stocks and keep them for few years until they grow. Politican John Bob…

You are presupposing that there is always a counterparty to trade with. What about sell-side market makers? Those clearly aren't "investments". I your solution, all buyers will pay more and all sellers will receive less.

Re: Wall Street’s ‘Private Rooms’

#102

Post by woleium »

hayst4ck wrote: post #90
gruez wrote: post #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 excl…

> won't impact prices I strongly suspect that wall street has looked at 401k's/index funds as a giant money filled piñata. It is a huge pile of money following a well understood algorithm which makes it vulnerable to attack. I suspect that this is the absolute core of "dark pool" strategy. Any trade that happens behind closed doors that "doesn't impact prices" means that an index fund is buying or selling at a price…

right? How is this different from standard OTC trading?

Re: Wall Street’s ‘Private Rooms’

#103

Post by entangledqubit »

hayst4ck wrote: post #90
gruez wrote: post #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 excl…

> won't impact prices I strongly suspect that wall street has looked at 401k's/index funds as a giant money filled piñata. It is a huge pile of money following a well understood algorithm which makes it vulnerable to attack. I suspect that this is the absolute core of "dark pool" strategy. Any trade that happens behind closed doors that "doesn't impact prices" means that an index fund is buying or selling at a price…

There are funds that trade on the rebalancing and entrances/exits of individual stocks from the indexes. While this may offer some yield, you can still get pulled under the bus by large scale movement in the markets... as seen recently.

While I'm not a fan of the "dark pools", if your "grandma" is a buy and hold anyway, the price of the asset should be ballpark correct most of the time since presumably the people doing the trades in the dark room are rational? I suspect that this setup is more useful if you need short term stability in the price to set up a complex deal.

Re: Wall Street’s ‘Private Rooms’

#104

Post by hattmall »

roenxi wrote: post #89
oangemangut wrote: post #24

Earlier quoted context omitted.

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,…

And what would the problem be with that example? It seems everyone has agreed on a fair price and is trading on it. There isn't any incentive for the private traders to trade at a different price or one of them is getting ripped off due to the arbitrage potential. And they don't believe that publicising the trade would move the price or - again - one of them would have an incentive to do so because it'd move in their…

You are disadvantaged as an outsider because you don't know who is buying or selling and how much they are trading. You don't know the demand levels at various price points. If, for example, you want to buy Stock A which is currently trading for $5 and sell it for $6, but there is someone trying to sell 5 million shares for $5.05 but you can't see that you can't make an informed decision on ideal price points for your trade.

Re: Wall Street’s ‘Private Rooms’

#105

Post by lmm »

Nifty3929 wrote: post #10

It 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.

Public, lit markets are a public good that lifts all boats. If people are feeling the need to move away from them that doesn't mean those individuals are up to no good, but it's a bad sign for the health of the system.

Re: Wall Street’s ‘Private Rooms’

#106

Post by JumpCrisscross »

oangemangut wrote: post #24
Nifty3929 wrote: post #10

It 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,…

> 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

That was the goal and it failed at it in everything but the most technical sense. Why two people coming to a handshake deal about the price of their property is illegal is insane. I previously bought the argument about propensity for fraud. But if we’re normalising crypto, there is zero need to continue treating stock like it’s radioactive.

Re: Wall Street’s ‘Private Rooms’

#107

Post by JumpCrisscross »

lmm wrote: post #105
Nifty3929 wrote: post #10

It 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.

Public, lit markets are a public good that lifts all boats. If people are feeling the need to move away from them that doesn't mean those individuals are up to no good, but it's a bad sign for the health of the system.

> Public, lit markets are a public good that lifts all boats

To a point. The benefits of millisecond-grain transparency really stretches my credulity.

Let people trade. Make them report it in a reasonable period. The folks who need millisecond granularity will find it. Most economic activity doesn’t need that, and while the liquidity is good, again, I’m not convinced it needs to be publicly disseminated in the way it is now.

Re: Wall Street’s ‘Private Rooms’

#108

Post by hibikir »

hayst4ck wrote: post #90
gruez wrote: post #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 excl…

> won't impact prices I strongly suspect that wall street has looked at 401k's/index funds as a giant money filled piñata. It is a huge pile of money following a well understood algorithm which makes it vulnerable to attack. I suspect that this is the absolute core of "dark pool" strategy. Any trade that happens behind closed doors that "doesn't impact prices" means that an index fund is buying or selling at a price…

let's assume you are right. Also assume that the two people in the dark room are both somewhat rational investors. Then let's imagine that they are trading at a price that is significantly different than the open price. Why are they both OK with that price? If the price is higher, the buyer could be buying for less in public. If it's lower, the seller is the one that could sell in public for a profit. So one of the two sides is making an obviously bad decision.

The idea instead is that in a dark room, you can trade large amounts of shares without HFT interference. They'll probably be trading pretty much at the public price, just without sending all kinds of information about the fact that they traded into the world.

Re: Wall Street’s ‘Private Rooms’

#109

Post by whatshisface »

JedMartin wrote: post #98
hayst4ck wrote: post #90

Earlier quoted context omitted.

> won't impact prices I strongly suspect that wall street has looked at 401k's/index funds as a giant money filled piñata. It is a huge pile of money following a well understood algorithm which makes it vulnerable to attack. I suspect that this is the absolute core of "dark pool" strategy. Any trade that happens behind closed doors that "doesn't impact prices" means that an index fund is buying or selling at a price…

It's actually the other way around. As a big fund looking to trade a large number of shares in the public market, you'll quickly realize that the market tends to move away from you, and statistically, you're more likely to get a bad deal than a good one. Even if you try to be smart about execution by splitting your orders into chunks, randomizing order sizes, and similar tactics, there is still a huge information asy…

Instead of demanding that your counterparty be uninformed, why not do a market open/close auction every minute?

Re: Wall Street’s ‘Private Rooms’

#110

Post by dheera »

ElliotM wrote: post #73
dheera wrote: post #5

I've been wading through terabytes of financial data over the past month. (I'm an ML/AI software engineer trying to create a trading bot that makes me more consistent income during times of uncertainty that are outside my control.) This is some of the data I'm looking at. NVDA price on a particular day vs. average position of trades in bid ask spread aggregated over 10 seconds, on all the exchanges it is being traded…

> Unfortunately the SEC only requires them to report transactions within 15 minutes, not in real time. TRF reports must happen within 10 seconds or be submitted with a late modifier [0]. An executing broker systematically submitting all reports 15 minutes late would be investigated pretty quickly. You can buy access to the consolidated tape from a marketdata provider, although this is going to be pretty prohibitively…

I have a Polygon real-time market data subscription and everything comes real time except for darkpools.

From the customer service bot:

"Yes, other trades are generally reported faster than dark pool trades on our WebSocket. We stream market data in real-time as we receive it, with most trades being reported very quickly. For US stocks, the average latency for trades and quotes is less than 20ms.

However, dark pool trades can be reported with a delay. FINRA allows up to 15 minutes for reporting trades from dark pools. This means that while most trades come through almost instantly, dark pool trades might have a longer reporting time."

I'm not sure what market data provider provides dark pool trades in real time?

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