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5 Ways to Beat the Fed (and Crush Inflation)
Twitter

Dark Pools

  • Featured Story

    The One Firm Trying to Keep You Safe from High-Frequency Trading

    high frequency

    By Shah Gilani, Chief Investment Strategist, Money Morning • @ShahGilani_TW - November 19, 2015

    One firm has proposed a "tiny" solution to the huge problem that high-frequency trading (HFT) poses to individual investors, challenging the way every other stock exchange does business.

    Will the SEC allow this company to revolutionize how stock exchanges are run... or will it once again side with the big banks, hedge funds, and HFT companies?

    We're about to find out...

Article Index

  • The One Firm Trying to Keep You Safe from High-Frequency Trading
  • Why the UBS Dark Pool Fine Is So Absurd
  • How Wall Street Plays the Dark Pools Game
  • Fight Club: Shah battles "Dark Pools" apologist on NPR today
  • How High-Frequency Traders Use Dark Pools to Cheat Investors
  • Dark Pools of Liquidity Are a Big Problem for Free Markets
  • Are "Dark Pools" Destined to be the Capital Markets' Next Black Hole?

The One Firm Trying to Keep You Safe from High-Frequency Trading

By Shah Gilani, Chief Investment Strategist, Money Morning • @ShahGilani_TW - November 19, 2015

high frequency

One firm has proposed a "tiny" solution to the huge problem that high-frequency trading (HFT) poses to individual investors, challenging the way every other stock exchange does business.

Will the SEC allow this company to revolutionize how stock exchanges are run... or will it once again side with the big banks, hedge funds, and HFT companies?

We're about to find out...

Why the UBS Dark Pool Fine Is So Absurd

By Shah Gilani, Chief Investment Strategist, Money Morning • @ShahGilani_TW - January 21, 2015

UBS dark pool fine

The UBS dark pool fine announced last week is yet another example of the U.S. Securities and Exchange Commission dropping the ball on one of the biggest schemes staring them right in the face.

The SEC came down on UBS Group AG (NYSE: UBS) for not following the rules and regulations that make markets fair and orderly - and also for not being honest to its clients.

But this "record" fine wasn't really newsworthy - in fact, it was pretty absurd...

How Wall Street Plays the Dark Pools Game

By Shah Gilani, Chief Investment Strategist, Money Morning • @ShahGilani_TW - July 1, 2014

Most people who are just "in the market" don't understand high-frequency trading (HFT) and dark pools.

My knowledge of HFT and dark pools dates back to the late 1990s, when I was trying to figure out how to get better executions on the large trades my hedge fund was generating. I consider myself a bit of an expert.

So, for all of you who want to know more, I’m going to share some of that expertise…

Fight Club: Shah battles "Dark Pools" apologist on NPR today

By Guest Admin, Money Morning - June 26, 2014

Today, Shah Gilani let some wicked punches fly, debunking the legitimacy of Wall Street's "Dark Pools" on NPR's popular talk show On Point.

As Shah himself said: "This is about how the market has been undermined and how it could collapse one day, literally, and trillions of dollars could be lost in a matter of days."

How High-Frequency Traders Use Dark Pools to Cheat Investors

By David Zeiler, Associate Editor, Money Morning • @DavidGZeiler - April 22, 2014

dark pools

High-frequency trading (HFT) has an evil cousin: dark pools.

While dark pools are not inherently bad, the abuse of dark pools by the high-frequency traders has created a whole series of problems that can harm both large and small investors.

Large investors are already starting to take steps to protect themselves, but most small investors have no idea of the harm these activities pose to them.

You're either the predator or the prey...

Dark Pools of Liquidity Are a Big Problem for Free Markets

By Greg Madison, Managing Editor, Money Morning - July 16, 2013

by Greg Madison, Associate Editor, Money Morning

Everything runs on liquidity. Unless you know something I don't, that dollar bill in your pocket is just as likely to buy a can of Pabst Blue Ribbon today as it was yesterday, and will be tomorrow.

Or you could sell 1,000 lbs. of gold - if you have that lying around - without fear of completely scuttling the global gold market. Your bank has to have cash, liquidity, lying around somewhere in the back if it wants to stay in business.

And in many cases, it's easy to see or verify this liquidity. It helps everyone feel better about doing anything.

But there are markets where this liquidity is kept off the open exchanges, where it can be used to juice up huge deals. Or it can prevent these huge deals from having the impact that they "should" have, keeping the hands of large traders hidden.

These are the sinister-sounding dark pools of liquidity.

Dark liquidity is generated and stored in a variety of ways, most of which are possible due to the huge variety of trading venues, electronic and traditional.

With dark pools, neither the size of the order nor the entity making that order can be known until the order is completed. Rosenberg Securities Inc. estimates that fully 15% - trillions of dollars - of all trades occurring on American exchanges, every day, utilize dark pools.

Not Playing Straight Poker

And the markets, like nearly everything else, operate on the wide availability and transparency of good, reliable information. A poker game gets its lurid thrills from the partial presence of that information, or the possibility that the information could be faulty. You wouldn't want to play with all your cards face-up. You just don't know, and that's why it's fun to play poker.

But the markets, despite some inkling to the contrary, can't function with true optimum efficiency if good information isn't available to the widest possible group of participants.

It's not that a player has to have the information, but it should be available to the player if things are going to work the way they should. One is a vying, gambling game, and the other is a free market. We should be able to tell the difference.

To continue reading, please click here...

Are "Dark Pools" Destined to be the Capital Markets' Next Black Hole?

By Keith Fitz-Gerald, Chief Investment Strategist, Money Map Report - July 10, 2008

By Keith Fitz-Gerald Investment Director Money Morning/The Money Map Report We can almost hear that ominous "Jaws" theme music in the background and can see that huge dorsal fin as it slices threateningly through the water - knowing full well that the real terror is hidden beneath the water's surface. But this time around, it's […]

Read More…

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