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Dark Pools - Case Study Example
Author : chills
Finance & Accounting
Pages 12 (3012 words)
Dark Pools Table of Contents Introduction 3 Dark Pools 4 Main aim of Dark Pool 5 Trading in Dark Pools 6 Effect of Dark Pool on Price Discovery 7 Improvement in price discovery by the dark pool 9 Dark Pool – Bad or Good 9 Name of Student: Name of Professor: Course Number: Date of Paper: Dark Pools Introduction The overall picture of the financial market has encountered much turmoil which has forced the traders or the investors to land in a depressing position, thereby losing their money…
They are known to be trading in a dark pool. Thus, the concept of Dark Pool was introduced much back in 1980. This was initiated when many few of the institutional investors and traders got involved in trade in a secure place, away from the interfering eyes of the brokers or public exchanges. Their main aim was to sell or buy large amount of the stocks without being affected by the market fluctuations and achieve a better price than that provided by the public exchanges (“Definition of Dark Pools”). It was noticed that around 2005, the dark pools was successful in capturing 3-5% of the total market activity. After that, the situation had started to improve when the Security and Exchange Commission (SEC) passed a new regulation, called the Reg NMS (Regulation National Market System). In this regulation, there were provisions which had increased the level of competition among the exchanges. However, it got rid of the rules that confined manual quotations which are generated by the stock exchanges. ...