Dark pools have a somewhat seedy image in the eyes of the public. They conjure up images of shady actors trading stocks anonymously without much regulatory oversight. Secret back room deals that put retail investors at a disadvantage. Yet, this perception is false, in my view. Dark pools enhance liquidity and provide valuable information to investors and company executives alike. This is particularly true for less liquid stocks, where trading may be sporadic and large investors may be reluctant to trade shares in reaction to a company announcement because they fear they may move the share price by publicly disclosing that they are buying or selling large numbers of shares.
The visible impact of trading in the dark
The visible impact of trading in the dark
The visible impact of trading in the dark
Dark pools have a somewhat seedy image in the eyes of the public. They conjure up images of shady actors trading stocks anonymously without much regulatory oversight. Secret back room deals that put retail investors at a disadvantage. Yet, this perception is false, in my view. Dark pools enhance liquidity and provide valuable information to investors and company executives alike. This is particularly true for less liquid stocks, where trading may be sporadic and large investors may be reluctant to trade shares in reaction to a company announcement because they fear they may move the share price by publicly disclosing that they are buying or selling large numbers of shares.