Stock Trading Heading to Dark Pools to Avoid Regulation

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April 1, 2013

An increasing amount of stocks are being traded in private dark pools away from public scrutiny and government regulation, according to an article in The New York Times.

The portion of all stock trading taking place away from the public exchanges hit new highs over the last few weeks, amounting to close to 40 percent on several days, up from an average of 16 percent in 2008, according to Rosenblatt Securities.

Regulators have been working to increase transparency in the stock market, but the U.S. has yet to address dark trading with the same energy as some other countries.

Canada has been among the most aggressive countries in confronting dark trading, introducing rules last fall that allow trades to take place in dark pools only if brokers are getting customers a significantly better price than is available on the public exchange. Within months, dark pool trading in Canada dropped to about a third of what it was before the rule, according to Rosenblatt Securities.

Read more at The New York Times.

Image from Flickr user windsordi.

Topics: Financial Sector

Related Content: Financial Oversight, Securities and Exchange Commission

Authors: Andre Francisco

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