Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Wall Street’s ‘Private Rooms’

bloomberg.com

Post reply on HN
Print view View original

131–140 of 213 posts

Re: Wall Street’s ‘Private Rooms’

#131

Post by nairboon »

Dylan16807 wrote: post #127
hattmall wrote: post #104

Earlier quoted context omitted.

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 you…

> you want to buy Stock A which is currently trading for $5 and sell it for $6 It sounds like I'm asking for a pony in this scenario. I shouldn't expect to get that. If I want to buy at $5 and hold it for more than a day, I don't think the secrecy of that big sale really affects me. It'll be over soon enough.

> If I want to buy at $5 and hold it for more than a day, I don't think the secrecy of that big sale really affects me. It'll be over soon enough.

It does, it means that you could've gotten the stock for maybe $4.9 instead of $5.

Re: Wall Street’s ‘Private Rooms’

#132

Post by roenxi »

nairboon wrote: post #131
Dylan16807 wrote: post #127

Earlier quoted context omitted.

> you want to buy Stock A which is currently trading for $5 and sell it for $6 It sounds like I'm asking for a pony in this scenario. I shouldn't expect to get that. If I want to buy at $5 and hold it for more than a day, I don't think the secrecy of that big sale really affects me. It'll be over soon enough.

> If I want to buy at $5 and hold it for more than a day, I don't think the secrecy of that big sale really affects me. It'll be over soon enough. It does, it means that you could've gotten the stock for maybe $4.9 instead of $5.

^_~ How? Nobody was selling it for $4.90 in that example.

Re: Wall Street’s ‘Private Rooms’

#133

Post by ipv6ipv4 »

bormaj wrote: post #97
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…

HFTs/market makers are competing for pennies on the dollar. They do not hold risk (long term), they exist to readily provide liquidity to your buy/sell orders. HFTs can be quite profitable, but that doesn't make them inherently evil. Can you elaborate why those bans will improve the market and what the issues are with HFTs in your eyes?

These dark pools and private rooms appear to be a response to HFT. To get away from HFT. So HFT appears to be fragmenting the market which is probably not a net good. If that is not the purpose of dark pools and private rooms, then what other purposes do they have?

Re: Wall Street’s ‘Private Rooms’

#134

Post by nairboon »

dheera wrote: post #110
ElliotM wrote: post #73

Earlier quoted context omitted.

> 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 t…

Are you using Polygon real-time data for individuals? I suspect if you're after more fine graded data you'd be looking for a data provider for "professionals". There are usually different offerings, one for personal use and one for business use ("professional subscriber"), but these market feeds are quite expensive.

Re: Wall Street’s ‘Private Rooms’

#135

Post by SR2Z »

throwaway2037 wrote: post #120
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…

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…

> This is how Robin Hood can offer free equity trading. They sell your flow to another firm that can front run it.

This is not true, and front-running trades is both easy to catch and illegal. This is a bad combo for any white-collar crime.

You are correct that they make money by selling non-toxic order flows, but non-toxic here just means that retail investors tend to be "dumb money."

Market-makers need to estimate how much an asset is worth to be able to quickly fulfill orders - they can't instantly find people to take the other side of their users' trades. For example, user A buys Gamestop at $10/share, the brokerage accepts the trade and internally writes an IOU for that share, but later on realizes that the true price of Gamestop is $10.05/share. This means that the brokerage will lose $0.05/share because the price they estimated for the asset was too low. If too many orders from a source are like this, the source is considered toxic because the market-maker will generally lose money on them.

Some types of traders have highly toxic order flows. For example, HFT firms exploit Retail traders, in contrast, don't reliably know when a stock is mispriced. If Jimmy Bob Joe blows his college fund buying TSLA for $250/share, the exchange can probably give him TSLA at that price and not lose money.

If a market-maker gets too many toxic orders, it has to offer their clients worse prices to compensate for mispricing risk. Worse prices drive customers away, so they will often choose to pay for nontoxic orders to keep that risk down. We, the retail investors, get to trade for free at better prices and the market-makers get to turn a profit.

> it is literally a fox in the chicken coop.

The foxes here are HFT firms, and the chicken coop is any market where you end up trading with them. These "dark pools" benefit the little guys because they exclude the more predatory traders.

Re: Wall Street’s ‘Private Rooms’

#136

Post by nairboon »

roenxi wrote: post #132
nairboon wrote: post #131

Earlier quoted context omitted.

> If I want to buy at $5 and hold it for more than a day, I don't think the secrecy of that big sale really affects me. It'll be over soon enough. It does, it means that you could've gotten the stock for maybe $4.9 instead of $5.

^_~ How? Nobody was selling it for $4.90 in that example.

Although the above example was missing some details, I suspected it was meant to illustrate the following effect: The public last price was $5, so bid/ask will be around that price let's say 4.99/5.01, if you buy with a market order you'd pay approximately $5 ($5.01). But if there is a new large sell order for 5 million shares at 5.05, then the market would react to this information and adjust bids & asks. For illustrative purposes it could be possible (if the 5 million order is rather large in comparison), that the new bid/ask would be 4.89/4.91 and you'd get your shares for around $4.9.

Re: Wall Street’s ‘Private Rooms’

#137

Post by petesergeant »

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…

> 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.

Did prop traders start out-performing index funds? If not, surely said supposition seems somewhat suspect.

Re: Wall Street’s ‘Private Rooms’

#138

Post by malthaus »

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…

why do you think you will be able to generate "consistent income" with a trading bot in a field that is highly scrutinized by some of the best talents in the world with access to better & faster data and backed by a mountain of capital?

Re: Wall Street’s ‘Private Rooms’

#139

Post by roenxi »

nairboon wrote: post #136
roenxi wrote: post #132

Earlier quoted context omitted.

^_~ How? Nobody was selling it for $4.90 in that example.

Although the above example was missing some details, I suspected it was meant to illustrate the following effect: The public last price was $5, so bid/ask will be around that price let's say 4.99/5.01, if you buy with a market order you'd pay approximately $5 ($5.01). But if there is a new large sell order for 5 million shares at 5.05, then the market would react to this information and adjust bids & asks. For illust…

That is irrational. It suggests every time someone sees a market price at $5 they could put in an enormous fake sell order for shares at $5.05 to buy shares at $4.90 then cancel the fake order, which makes no sense. "The market" is giving away freebies in an insane way.

If the clearing price is $5 and someone puts in a huge sell order for $5.05 there is no reason for the clearing price to drop.

Re: Wall Street’s ‘Private Rooms’

#140

Post by chii »

nairboon wrote: post #130
chii wrote: post #123

Earlier quoted context omitted.

> to another firm that can front run it. to be legal, the broker selling your order flow must give the price you're supposed to have gotten to be at or lower than the best price from the market. I dont get how front running could work under this legal rule.

OP just provided an explanation for Robin Hood's business model, it was never stated that Robin Hood operates in accordance with the law. In fact it is well known, that Robin Hood operated illegally for a long time and got fined by the SEC for its violations: https://www.sec.gov/newsroom/press-releases/2025-5

None of those violations are related to trade order flow.

The majority are related to customer protections, lack of data retention etc. With perhaps the violations related to the blue sheet data (transaction data), which is used by various financial regulators to sniff out illicit transactions.

Robinhood's been accused of selling out their retail customer by allowing HFT firms to frontrun retail trade. And yet, no evidence of such actions have been found so far.

Post reply on HN