By Hal M. Bundrick
NEW YORK (MainStreet) aAA Whether or not the stock market is "rigged" is a matter for debate, but it is an undeniable fact that a great deal of information has been commonly provided to professional traders while withheld from the general public. "Dark pool" trading is an example. These alternative trading systems operate away from the second-to-second public scrutiny of the traditional stock exchanges, providing transaction data and access only to professional traders. Now FINRA, the self-regulatory authority of the U.S. securities industry, is lifting the veil of secrecy from these hidden trading venues.
The new report reveals trade volume by security for each dark pool, which cumulatively account for about 40% of all trading volume, according to the Tabb Group.
"Under FINRA's new transparency initiative, the public will now be able to see the total shares traded each week by security in each ATS or 'dark pool,'" a FINRA release announcing the service says. "This data will be provided to the non-professional investing public free of charge and is available through FINRA's website."
Bank of America (BAC), Credit Suisse (CSGN) and Barclays were the largest players in the underground market which includes Wall Street's biggest names, including UBS, Morgan Stanley and Goldman Sachs, according to the initial report.
"FINRA hopes that providing a clear view of the level of activity handled by these ATSs or 'dark pools' will increase market transparency and thereby enhance investor confidence," Steven Joachim, FINRA executive vice president of Transparency Services, said in the release. "FINRA's commitment to transparency is bringing light to what was previously a dark area of the equity markets. Making this information available to both the investing public and market participants provides an unprecedented view into the activity of these highly significant trading venues."
Prior to the FINRA initiative, dark pool trading volume has been provided to professional traders through voluntary reporting by some, but not all ATSs, on a monthly basis. FINRA says the weekly data report "provides a new level of transparency that may be reviewed and studied by non-professional and professional traders, academics and regulators."
--Written by Hal M. Bundrick for MainStreet