Should We Worry About 'Dark Stock Pools'?

Last week, we learned that the Securities and Exchange Commission was investigating secondary markets for stock trading, where investors buy and sell shares of privately held companies. This week, of course, news hit that Facebook was selling a sizable chunk of its privately-held company to Goldman Sachs, which will distribute it to its wealthy clients. While off-exchange stock trading might sound like a relatively new phenomenon, it's already grown to be a very significant part of the market. Jacob Bunge from the Wall Street Journal reports:

Private markets accounted for a record 1 in 3 U.S. stock trades last month as the country's four largest stock-exchange groups continued to lose market share, according to data released Monday.

The rise of so-called dark pools and other off-exchange strategies aimed at large banks and institutional traders comes as regulators on both sides of the Atlantic grapple with balancing the market efficiencies the alternative venues say they generate with the impact on individual investors.

No wonder the S.E.C. has become interested. One-third is a huge portion of trades, and as financial regulations grow stricter, such transactions aren't likely to lessen. While average Americans generally have a tough time beating financial professionals when it comes to investing, if this trend continues, it may become even more difficult.

Read the full story at the Wall Street Journal.

Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

Never Tell People How Old They Look

Age discrimination affects us all. Who cares about youth? James Hamblin turns to his colleague Jeffrey Goldberg for advice.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

Never Tell People How Old They Look

Age discrimination affects us all. James Hamblin turns to a colleague for advice.

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

Video

Pittsburgh: 'Better Than You Thought'

How Steel City became a bikeable, walkable paradise

Video

A Four-Dimensional Tour of Boston

In this groundbreaking video, time moves at multiple speeds within a single frame.

Video

Who Made Pop Music So Repetitive? You Did.

If pop music is too homogenous, that's because listeners want it that way.

More in Business

Just In