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Dark Pools and High Frequency Trading For Dummies by Jay Vaananen

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Chapter 4

Introducing Dark Pool Providers

In This Chapter

arrow Perusing the different types of dark pool providers

arrow Knowing what distinguishes them from each other

Dark pools are a major part of the global financial markets. They’re an alternative place to trade stocks to that of a traditional stock exchange. Big institutions needed places where they could buy large amounts of stock without tipping their hand to other investors and so moving the price of the stock. Brokers and banks were also keen on setting up their own dark pools so they could then internally match trades and not have to go to the stock exchanges and pay the stock exchange fees.

The dark pool market is vast and different banks and brokers offer many different types of dark pools. You need to know the differences between the various dark pool providers, because each has its own specific way of operating and executing trades, which can affect how your trade is settled.

Dark pools are under constant media and regulatory scrutiny, and several have been fined or are under investigation. Some providers have taken liberties with their client orders and trading information, and that means you’re at risk. Make sure you know which dark pools have been fined and which ones are under investigation to protect your investments ...

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