Dark liquidity
As a Dark Pool ( also Dark pool of liquidity ) is called a bank and exchange internal trading platform for anonymous trading of financial products, which will be completed outside the open securities trading of the stock exchanges. The dark pools include areas such as Forex ( Spot or Spot currency trading), CFD (Contract for Difference) and OTC (over the counter). Dark pools are not subject to the rules and supervision of the European stock exchanges. The central feature of dark pools is the lack of transparency. How many securities will be offered or demanded at what price will the dealers not displayed. This makes the pricing. The exact form of trading opportunities differs from dark pool to dark pool. Most are funded operators of " dark pools " on the so-called spread, ie the difference between bid and ask and provide the actual transaction for the user as free. The spread over the hidden funded fees can far exceed those of regulated exchanges. For sellers, it is complicated to compare the exact cost, because to Bid & Ask to be compared a " dark pools " with exactly the range of the stock market at this very moment.
Even stores that are indeed handled outside the stock exchanges, stock exchanges but are reported ( for example, block trades ) are counted to the " dark side ".
Operation
While most exchanges are at the supply and demand for individual securities apparent from the order book for all market participants, the available liquidity in dark pools is kept secret. Want a dealer over a dark pool securities purchase, it is not apparent to him if he can carry out his orders. Only if the same period another dealer wants to sell at least the same number of securities, there is a transaction. The price is derived in this case typically from another exchange from. Typical in this context the average of the highest purchase offer and the lowest offer to sell is ( bid-ask spread). By definition, the execution of an order is therefore uncertain. But the price is cheaper for both the buyer and for the seller as in the stock market. In addition, other market participants received no information about the transaction. This is mainly the sale of large quantities of securities relevant because is influenced by changing supply and demand on the stock market price.
Background
In contrast to regulated or unregulated markets dark pools must meet no or only marginal transparency requirements. While there were no well-functioning dark pools in Europe in the summer of 2008, there are in the United States have been few. However, the topic of dark pools in Europe and Asia is also gaining increasing importance, since many investors prefer to remain anonymous with large order volume. While many exchanges superior, together with major investment banks to initiate new Dark pools, the German stock market reasons of neutrality has previously spoken out against the creation of such an offer. The U.S. Securities and Exchange Commission expressed criticisms because of the lack of transparency and threatened with regulation.
Worldwide existing dark pools
NYSE Euro Next, HSBC and BNP Paribas operate since the end of 2008 a dark pool called Smart pool. This unwinds be cleared through EuroCCP and settelt over LCH.Clearnet.
Crédit Agricole operates through its subsidiary CLSA a dark pool with the name BlocSec.
Moreover, there is, Liquidnet with a dark pool operators in New York, in Japan, Hong Kong, South Korea and Singapore has access points.
The London Stock Exchange is currently (April 2009) pools called Baikal under construction a Dark, which is built in all probability by the system operator Fidessa.
Since August 23, 2010, the German bank operates with the German Bank Automated Trading System ( dbats ) a dark pool in Hong Kong.
Crossing networks
Crossing Networks are trading systems that allow it a trading participant (eg a large bank ) to bring together various customer orders ( "match " to ), if match, so as to prevent the forwarding to external exchanges. Some of these systems result in the customer orders against own stocks in each trading participant. Thus, it is the participants possible to save on fees. Since these systems do not show the standing in the books of bids and asks transparent, they are also counted among the dark pools.
Goldman Sachs also operates in Hong Kong in March 2009 a dark pool under the name Sigma X, with the internal " Crossen " of matching trade orders is possible, before they are forwarded to external trading venues. This process is also called internalization.
The dark pools represent only a portion of the so-called "Dark Trade" dar. As Dark Trade is a term generally trade, which is handled over the counter between banks and market participants. As a "Lit Trade" contain a trade on regulated exchanges and the Multilateral Trading Facilities ( MTF) is called, regardless of whether it is handled by the trading floor or on an electronic trading system.
The market share, which is now being traded in Europe about Dark trades is as specified by the London Association of Chartered Financial Analysts ( CFA) today nearly 40 % of the trading volume of major European stock exchanges, with some of the most important standard indices (among DAX) even 50%. This contradicts a statement to the Financial Times, quoted in the Basler Zeitung of mid-2010, after which only 1.25 % of the European volume over dark pools are traded.