Q: Hello 5i,
Can you shed some light on Bloomberg's article into alternative off-exchange activity. The report indicated that 51% of all trades now are through this or alternative platforms called dark pools instead of Wall Street. It sounds like rich people getting higher value for their investments than the ordinary joe.
Thank you
D&J
Can you shed some light on Bloomberg's article into alternative off-exchange activity. The report indicated that 51% of all trades now are through this or alternative platforms called dark pools instead of Wall Street. It sounds like rich people getting higher value for their investments than the ordinary joe.
Thank you
D&J
5i Research Answer:
We are not sure of the specific article being referenced but we don't think there is anything nefarious going on here. Larger investors will sometimes utilize these so algorithms/other investors can't catch wind of larger orders and 'play games' on someone trying to enter/exit a position, and allow for smoother trading. Trades do not need to be executed on any exchange. There just needs to be a legal change of ownership. High frequency trading can be advantageous to large 'traders' but it does not impact a company's fundamentals. "Investors" are not really disadvantaged as much as they think they are. Trading will not change the course of stock's trajectory over the long term.