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.

Google Street View, Transformed Into a Tiny Planet

A 360-degree tour of our world, made entirely from Google's panoramas

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

Google Street View, Transformed Into a Tiny Planet

A 360-degree tour of our world, made entirely from Google's panoramas

Video

The 86-Year-Old Farmer Who Won't Quit

A filmmaker returns to his hometown to profile the patriarch of a family farm

Video

Riding Unicycles in a Cave

"If you fall down and break your leg, there's no way out."

Video

Carrot: A Pitch-Perfect Satire of Tech

"It's not just a vegetable. It's what a vegetable should be."

Video

The Benefits of Living Alone on a Mountain

"You really have to love solitary time by yourself."

More in Business

Just In