New York - Add dark pools to the list of losers as US stocks plunge.
Less than 30% of volume in the US stock market on Monday was handled in Wall Street’s more secretive corners: off-exchange platforms such as dark pools and banks’ internal networks. If that level persists through the end of the day, it will be their lowest market share since August 1, 2012.
Overall trading surged on Monday as global markets convulsed, pushing total US volume past 5.7 billion shares just after 11:45 New York time. Over the past year, trading has averaged 6.6 billion shares for an entire day.
For years, less-regulated platforms have lured business away from more transparent exchanges. That trend reversed on Monday with NYSE Arca, Nasdaq Stock Market and Bats Global Markets winning abnormally high volumes. Off-exchange volume usually exceeds 35% and sometimes tops 40%.
Regulators have targeted dark pools in recent years. Investment Technology Group agreed this month to pay the largest-ever fine for rule violations by a dark pool. UBS Group was also fined by the Securities and Exchange Commission this year, and New York’s attorney general has gone after Barclays.
Bloomberg LP, the parent of this news organisation, runs an off-exchange trading system called Tradebook and owns a stake in Bids Trading LP, which operates a dark pool.