Should We Worry About 'Dark Stock Pools'?

More

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.

Jump to comments
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.
Get Today's Top Stories in Your Inbox (preview)

What's the Number One Thing We Could Do to Improve City Life?

A group of journalists, professors, and non-profit leaders predict the future of livable, walkable cities


Elsewhere on the web

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

Adventures in Legal Weed

Colorado is now well into its first year as the first state to legalize recreational marijuana. How's it going? James Hamblin visits Aspen.

Video

What Makes a Story Great?

The storytellers behind House of CardsandThis American Life reflect on the creative process.

Video

Tracing Sriracha's Origin to Thailand

Ever wonder how the wildly popular hot sauce got its name? It all started in Si Racha.

Video

Where Confiscated Wildlife Ends Up

A government facility outside of Denver houses more than a million products of the illegal wildlife trade, from tigers and bears to bald eagles.

Video

Is Wine Healthy?

James Hamblin prepares to impress his date with knowledge about the health benefits of wine.

Video

The World's Largest Balloon Festival

Nine days, more than 700 balloons, and a whole lot of hot air

Writers

Up
Down

More in Business

Just In