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Wall Street’s ‘Private Rooms’

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Re: Wall Street’s ‘Private Rooms’

#81

Post by _bin_ »

reverendsteveii wrote: post #19
qweiop wrote: post #6

I 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"

The only reaction more adverse than the one you get asking coders about remote voting is the one you get asking finance people about transparency and anticorruption. It's an open secret at this point that any effort that would weed out a significant proportion of the fraud would cripple our finance sector overall just because everyone who runs it would be in prison.

it's more like because governments have started to try to assign criminal liability to seniormost execs, not just to the people responsible. this is a response to the wink-and-nod cases that do exist but glaringly fails to account for the complexity and scope of large financial institutions and the fact that the guy at the top can't always supervise everything personally.

i don't know who you're talking to but no, it's not that criminal. it may be "corrupt" in the sense of rent-seeking or recapture-heavy institutions. it may be "corrupt" in the sense that your average IB analyst knows he's pulling long hours to churn out reams of 80% BS. it may be "corrupt" in that the VP at a PE fund knows that 7 turns of leverage and an inflated multiple for this middle-market shitco isn't actually a good buy. but there are a lot of honest people, enough that you can choose to do business with the same.

Re: Wall Street’s ‘Private Rooms’

#84

Post by MegaButts »

tremarley wrote: post #28
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…

Banning something doesn’t make it go away. Millions of people will be doing it, irregardless if it’s banned or not. The best thing you can do is let it happen, monitor it and call out bad actors.

Do you also believe we shouldn't make laws just because people will still break those laws?

Re: Wall Street’s ‘Private Rooms’

#85

Post by mmooss »

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.

> 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.

Massive public investments and global finance could result in you and your neighbor losing your jobs and houses, and cost you a lot of tax dollars rescuing them. It's happened multiple times. That's why they need to be regulated.

Re: Wall Street’s ‘Private Rooms’

#86

Post by mmooss »

tremarley wrote: post #28
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…

Banning something doesn’t make it go away. Millions of people will be doing it, irregardless if it’s banned or not. The best thing you can do is let it happen, monitor it and call out bad actors.

> Banning something doesn’t make it go away.

It does make it much more expensive, and something that people with other options won't want to be involved in. If 'dark room' trading was illegal, Goldman, etc. would exit those markets.

It's true that people break laws, but the extreme idea that laws and law enforcement are therefore useless is obviously wrong. Look, for example, at the Republicans and their allies banning DEI - it's had quite an effect.

Re: Wall Street’s ‘Private Rooms’

#87

Post by 6stringmerc »

This actually sounds really cool as a vetting of counterparties and risk reduction for liquidity. I worked munis 2008-2010 in support but learned a ton about all sorts of Wall Street products - traditional and synthetic. So these are for trades, formal, with a bit more teeth to them than CDS type transactions, which even post crash were crazy amounts of money on paper but structured by usually pretty knowledgeable firms (in our pool). Every tool can be misused, and the minority owned room / platform actually seems neat to me. The casino is big and brutal and smaller firms have roles too.

Will these lead to another London Whale? Time will tell.

Re: Wall Street’s ‘Private Rooms’

#88

Post by 6stringmerc »

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.

Great points - to put it another way, considering the data is available and investors now have the horsepower to crunch the numbers…why doesn’t Wal-Mart publish their entire inventory for every store in their system in an easy to digest CSV or whatever? Investors deserve to know!!!

Or, you know, sometimes people do business behind closed doors because day to day operations aren’t useful in many scenarios.

Re: Wall Street’s ‘Private Rooms’

#89

Post by roenxi »

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,…

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 favour.

I don't see how I'd be disadvantaged as any actor in that scene.

Re: Wall Street’s ‘Private Rooms’

#90

Post by hayst4ck »

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 other than the "real" price meaning that dark pools are functionally a wealth transfer from grandma to an institutional trader.

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