Thomson Reuter’s data showed that dark pools held in unidentified trading places continued to gain equity trading in October which sacrificed the public exchanges in Europe, hence the unfair advantage against other clients.
These secret venues for trading have been the subject of a number of investigations of the authorities in the U.S which started in June. The authority is looking at the dark pools operated by a number of U.S. and European banks like the United States Goldman Sachs Group and UBS of Switzerland.
The dark order books represent 6.9% of the total stock European trading in September and up to 6.4% in the month of August. Dark order books are those that allow for the buy and sell of shares without public information the market until the closing of the trade.
There have been around 53 billion euros or $66.9 billion worth of shares which traded in the dark pools according to the Thomson Reuters data. The shares did change hands and there’s up to 20% for September alone.
It’s unfortunate that dark pools are continuously growing faster, even with regulators trying to stop them. If this trading in these types of markets doesn’t come to an end, regulators are concerned that proprietary trading firms and investors with aggressive trading tactics or schemes will likely have an unfair advantage over other investors or clients.
While it’s true that the share of dark pools in the total market is not that much, what’s alarming is that they seem to grow faster these days and how know what’s going to happen next. Meanwhile, in ‘lit’ order books, live trade data are published and it’s operated by the primary stock exchanges together with a number of other huge firms.
As far as the equity turnover on the ‘lit’ order books this October is concerned, it increased by 5%, which amounts to 714 billion euros, but stays on it’s lower than a billion total market turnovers way back 2008.