Author Topic: "Welcome To The Next Futures Economic Trading Shock, Secret Trading !"  (Read 1485 times)

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Offline megimoo

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Big Traders Dive Into Dark Pools

The alternative trading systems are luring big institutional customers by offering greater privacy and lower costs. Their growth could affect big exchanges

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It's not easy being a big player in the stock market. Trading huge quantities of stock on traditional exchanges has become ever more challenging, costly, and potentially disruptive. And if other players see your moves, they can disrupt your trades. That's led to the emergence in recent years of alternative trading systems known as dark pools. And their growth could have significant implications for big stock exchanges—and individual investors.

Dark pools sound like something from Greek mythology or a sci-fi epic, but in stock-market speak they are private trading networks that big brokerages such as Lehman Brothers (LEH) and Merrill Lynch (MER) have developed primarily for the internal matching of orders between buyers and sellers who are clients of the same brokers.

But dark pools have developed links among Wall Street firms as well, so that orders can be matched across different brokerages. Indeed, some firms are teaming to launch new dark pools such as BIDS Trading.

Growing Popularity

Alternative trading systems, or ATSs, have gained an increasing share of equity trading in the past few years. In addition to dark pools, ATSs include crossing networks, such as independently owned Liquidnet and Pipeline,

that match orders for execution without having to first route them to an exchange or market center where they could be viewed publicly.

"Sounds like yet another way to 'Rig the Stock Market' !"
 
Besides enabling investors to execute an order without affecting the public price quote, crossing networks match orders at a specified price, typically the midpoint of the bid and ask prices on stocks at the point in time of the trade. Electronic communications networks (ECNs), which trade stocks and currencies, are another type of ATS.

http://www.businessweek.com/investor/content/oct2007/pi2007102_394204.htm