Per a Fox Business Network report, the dark-pool trading probe
has been extended to
The Goldman Sachs Group, Inc.
). The trading that takes place in dark pools operated by these two
big Wall Street firms is being investigated by New York's Attorney
General. Notably, dark pools of many banks including Barclays PLC (
) and Credit Suisse Group AG (
) are already under regulatory review.
Notably, MS Pool of Morgan and Sigma X of Goldman are among the
biggest dark pools in the country.
Dark pools are alternative trading systems or private exchange,
where institutional investors can anonymously trade shares. Unlike
the established stock exchanges, dark pool trading venues are not
accessible by the investing public, and moreover, the price and the
volume of trade are disclosed only after the trading is
Hence, the crux of dark-pool trading is lesser transparency.
Consequently, brokers and proprietary trading firms that use
aggressive high-frequency trading strategies are in a position to
take unfair advantage over other clients.
Nevertheless, New York's Attorney General has recently launched an
unprecedented investigation into dark pools and has indicted
Barclays' for allegedly failing to disclose the number of
high-frequency trades. Another big bank Credit Suisse has also been
charged by the attorney general's office on similar grounds.
Alacrity of regulators to initiate investigations in dark pool
trading indicates willingness of the government to bring
transparency in the trading industry, and more importantly to
protect the interests of investors.
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