dark pools nonesense , page-35

These conversations about dark pools are 95% drivel.

If I have a market with 20 bids and 18 asks that together represent about $4M of capital, do I want the player with $100M of stock who wants to sell $40M to dump that into the ASX open book? What owner of that stock wants to see $40M on the Ask side of the book completely distorting the market? The presence of so much capital on just one side of the book would completely crash the price of the stock. In whose interest is that?

You can make the same argument if the player wants to buy $40M of stock. It's in no one's interest (except a market manipulator) to want see $40M of buying activity on the Bid side of the book. That's going to massively spike the price of the stock and create massive price distortions that are purely temporary and represent ad hoc emotional reactions to seeing an unbalanced book.

Dark pools serve a completely legitimate purpose of allowing large position holders to get more liquidity than they could get through the regular market book. By trading off the exchange, they PREVENT market distortions in price.

Further, you are completely insane if you don't realize that the bid and ask spread on those dark pools are much wider than on the open exchange. A large position holder accepts the wider spread in order to gain additional liquidity, from someone (probably an investment bank) who is willing to take the other side of the trade. So dark pools are never a first choice for anyone looking to buy or sell, unless you have so much damn money that your trades would distort the market.

The only bad thing about dark pools is lack of uniform and immediate disclosure of trades to the market. The market has every right to know about trades as they happen. The market doesn't have a right - and probably we shouldn't want the market to see - the bid and ask inside the dark pool. Seeing those bids and asks will only increase market price volatility, without increasing liquidity for the regular market book. In whose interest is it to increase market volatility? I mean - for Christ's sake - do we not already have about 10 times more market volatility now than we did 10 years ago? Do we really need more?

Why do people need so much conspiracy theory to get through their day? Please go read a good mystery novel and stop all the soap opera theory applied to the market.