In some cases, these dark pools allow outsiders entry to increase their order flow.
Chief Executive Bob Greifeld recently called for regulators to clamp down on dark pools.
Some exchanges are even quietly creating dark pools of their own, buried within their main market.
Stock trading via dark pools in the U.S. is up almost 50 percent since 2009.
Eleven of the 29 dark pools offer glimpses as "indications of interest, " according to the SEC's research.
The Securities and Exchange Commission is laying down the law with dark pools--or at least starting to.
Indeed, dark pools are the direct result of an SEC rule allowing the private National Market System to be formed.
Dark pools, unfortunately a nefarious-sounding moniker, actually have exotic names like H20, Liquidity Ping, Matchpoint, PIN, MS Pool and Liquifi.
For post-trade transparency, the Commission has also proposed that dark pools publicly announce trades happening on specific platforms.
FORBES: Dark Pools: The Menace Of Rising Opacity In Financial Markets
Dark pools are a private or alternative trading system that allows participants to transact without displaying quotes publicly.
FORBES: Dark Pools: The Menace Of Rising Opacity In Financial Markets
There are various estimates about the number of dark pools in the U.S. with many citing about 60.
Today over 35% of ALL U.S. equity trading prints on TRFs and all ATS dark pools print there.
It never displays a bid or offer but uses a complicated pattern that is employed in dark pools, ECNs and exchanges.
Buy-side traders for mutual fund empires, pension funds and banks see dark pools as the most likely place for information leakage.
Obviously, price discovery on the mainstream market, without dark pools information, becomes inefficient.
FORBES: Dark Pools: The Menace Of Rising Opacity In Financial Markets
Singapore Exchange CEO Magnus Bocker discussed Chi-East and the Asian regulatory landscape for dark pools with Steve Forbes.
They also have near-instant access to capital markets and dark pools of liquidity.
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Dark pools are expected to grow from 9% of the market now to 15% by 2010, according to Tabb Group.
If an exchange can't execute an order, it will look at indications of interest from a number of dark pools.
Mahoney also encourages dark regulation across the board, including not only dark pools but also electronic communications networks and exchanges.
Since the exchanges have hidden orders, he hopes future regulations will address those venues as well as fair access to dark pools.
Dark pools are known for cutting costs as some venues allow trading at the midpoint between the bid and the ask price.
Almost 28% of trades, however, are either internalized or handled via dark pools and reported into the Finra Alternative Display Facility.
Dark pools are trading venues that trade outside of a stock exchange.
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Rather than flash the order for a potential mate, the exchange can route it through the dark pools that expressed indications of interest.
The regulator put out a proposal for comment recently that makes some dark pools look more like exchanges and helps the retail investor.
Long gone are the days of two dominant market centers that have most of the trading volume with the proliferation of dark pools.
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All dark pools do not disclose the identities, but after that there is a wide range of ways dark pools handle order information.
Dark pools are "dark" or non-displayed in order to not disclose information about the trader's identity or, in varying degrees, the order information.
Moreover, transactions carried out in dark pools effectively become over-the-counter in nature as the prices are not reported and financial risks not effectively managed.
FORBES: Dark Pools: The Menace Of Rising Opacity In Financial Markets
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