Exploring The Underground Trading Systems

1822 Words8 Pages
In stock markets and public exchanges around the world there are ongoing underground trading systems. These systems are a marketplace for electronic investors to provide liquidity. When utilizing the ways of purchasing and selling stocks frequently, multiple facets of these exchanges expose different ways that price discovery will be affected. These underground markets are called Dark Pools. The speed and rate at which trading is possible within dark pool markets are far beyond what past models of trading were composed of. New programs and models allow traders to become leaders by devising new ways to compete in the market for completing orders. Traders devise algorithmic robots that utilize artificial intelligence. These amplified tools of trading are utilized in a way that impacts trading capabilities and price discovery by the average investor. By analyzing the functionality and techniques used in trading within Dark Pools an understanding will be gained of how dark pools disparately impact and affect price discovery. A Dark Pool is an underground exchange or forum that allows investors to trade without transparency. They allow liquidity to most commonly institutional investors that wish to sell off large blocks of stocks. Dark pools are a favored venue for large traders as there is a higher potential for them selling the full block of shares they wish to sell. The possibility of price improvement also exists, as well as reducing market impact. The term Dark Pool
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