"Wall Street" and "Transparency" is an oxymoron.
Wall Street’s ‘Private Rooms’
111–120 of 213 posts
Re: Wall Street’s ‘Private Rooms’
#112I remember reading about dark pools and asking a friend in finance if the sector really is as corrupt as it sounds, his reply? "Oh much more"
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Re: Wall Street’s ‘Private Rooms’
#113>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…
isn't that illegal?
Re: Wall Street’s ‘Private Rooms’
#114Earlier 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…
>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 other than the "real" price meaning that dark pools are functionally a wealth transfer from grandma to an institutional trader. Is there evidence for this, or this all baseless speculation?
These kinds of wealth transfers have been studied, and you do not need dark pools for them, just predictable trading patterns. See, e.g., https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5080459 on index funds or https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5122748 on funds that maintain a certain ratio of stocks to bonds (e.g., target-date funds). These costs can be larger than the actual management fees of the funds.
Re: Wall Street’s ‘Private Rooms’
#115>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…
isn't that illegal?
No? It seems to be quite common. What's your reason to think that it might be illegal?
Re: Wall Street’s ‘Private Rooms’
#116Earlier 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…
Ask yourself: if 99% of the volume is being traded inside the house, how much easier is it to move the "fair" price in that street auction?
Re: Wall Street’s ‘Private Rooms’
#117Earlier 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…
>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 other than the "real" price meaning that dark pools are functionally a wealth transfer from grandma to an institutional trader. Is there evidence for this, or this all baseless speculation?
It sounds like they didn't read the article. Grandma's money is in a large centralized retirement fund whose managers trade via dark pools, specifically so she won't be grafted by AI traders every time they need to adjust its holdings.
Re: Wall Street’s ‘Private Rooms’
#118I remember reading about dark pools and asking a friend in finance if the sector really is as corrupt as it sounds, his reply? "Oh much more"
I used to be friends with some finance guys around 2008 and they told me the same thing. Retail investors are basically suckers to them who can be exploited.
Re: Wall Street’s ‘Private Rooms’
#119>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…
This is OTC trade right?
Re: Wall Street’s ‘Private Rooms’
#120>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…
Agree: They are called block trades in equities. Also, another benefit of a dark pool is that you can pay to control who you trade with. On the primary exchange, it is dog-eat-dog. This is why long-only asset managers prefer block trades for supersize trades, and dark pools for smaller trades.
To me, the practice of paying for (non-toxic retail) flow is way more suspicious than dark pools. This is how Robin Hood can offer free equity trading. They sell your flow to another firm that can front run it. Unless you have incredibly overreaching regulation and constant monitoring, it is literally a fox in the chicken coop.