Hey, are there actually people that work for the SEC with a pulse?

When did that happen ?

“The U.S. Securities and Exchange Commission will propose toughening its limits on the amount of anonymous trading carried out on stock platforms called dark pools, according to two people familiar with the deliberations.

The commission will propose lowering the amount of daily volume in a company’s shares that can be executed on the networks before prices must be made public to 0.25% from 5% tomorrow, said the people, who declined to be identified because the discussions weren’t public.

The rule change may curtail the number of transactions on dark pools, off-exchange platforms run by firms such as Goldman Sachs Group Inc. and Getco LLC that have drawn scrutiny from Democratic Senators Ted Kaufman of Delaware and Charles Schumer of New York. The systems usually shut down trading in a security when they approach the current 5 percent limit.”

5% down to 0.25%? That is a 95% decrease.

Interesting development . . .

>

Source:
Dark Pool Trade Limit Said to Be Cut 95% in SEC Plan
Jesse Westbrook and Whitney Kisling
Bloomberg, Oct. 20 2009

http://www.bloomberg.com/apps/news?pid=20601087&sid=azDE7Q.4qkTo

Category: Markets, Regulation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

19 Responses to “SEC to Curtail Dark Pool Trading”

  1. km4 says:

    Obama to Mary Shapiro – I’m too indebted to Wall St. to do essential financial reform so throw me a bone I can play to the rubes

    http://www.theatlantic.com/doc/print/200905/imf-advice

    NET NET: If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform…..Simon Johnson

  2. call me ahab says:

    km4-

    whatever happened to American Exceptionalism?

    LOL

  3. km4 says:

    @ call me ahab
    Unfortunately those days are looking more and more like yesteryear !

  4. call me ahab says:

    km4-

    you are obviously a commie- and do not believe in America- we should be able too buy all the dumb shit we want- on credit- forever-

    you should obviously move to China – that’s where the commies are-

    proud to be an American

  5. franklin420d says:

    buy all the dumb shit we want- on credit- forever-amen bro

  6. trader149 says:

    I use dark pools in both my manuel trading and when writing automated strategies. They’re simply a way to access liquidity. They reduce costs for all involved, including individual investors. It’s unfortunate that politicians either don’t understand this or are more interested in political pandering.

  7. km4 says:

    @call me ahab

    I say we crossed the Rubicon with Reagan in the 1980′s and it has taken about 25 yrs of debt does not matter with extreme greed by the corrupt elite and ineffectual US government to manifest an absolute fugly situation for most Americans going forward.

    Can this situation be rectified.

    I certainly hope so !

  8. contrabandista13 says:

    OT:

    I highly recommend watching this episode of Frontline from PBS… It played tonight and it features as villains the likes of Bob Rubin, Alan Greenspan and Larry Summers. With innuendo directed at Tim Geithner…. Poor Obama, what is he thinking, surrounding himself with people like these? If I was an advisor to him I would tell him….

    “Mr. President with all due respect, there hasn’t been a lynching in this country since the 1960s, however with the likes of Summers, Geithner and Bernanke guiding your policy, you may very well be the next one…?

    I think that Obama is completely clueless….

    THE WARNING

    Frontline

    http://www.pbs.org/wgbh/pages/frontline/warning/

    “We didn’t truly know the dangers of the market, because it was a dark market,” says Brooksley Born, the head of an obscure federal regulatory agency — the Commodity Futures Trading Commission [CFTC] — who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country’s key economic powerbrokers to take actions that could have helped avert the crisis. “They were totally opposed to it,” Born says. “That puzzled me. What was it that was in this market that had to be hidden?”

    In The Warning, veteran FRONTLINE producer Michael Kirk unearths the hidden history of the nation’s worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.

    Best regards,

    Econolicious

  9. contrabandista13 says:

    Duhhhhh…… never mind…. ;-)

  10. philipat says:

    Why not go the whole way and just ban Dark Pools entirely as being not in the public interest? They probably promised Wall St that they would not ban them?!

  11. bsneath says:

    It smacks of a entire financial system structured around artificial assets. Exotic products are developed that few can understand or properly assess risk upon, which is all the better for the house and the sharks. We functioned quite well before these synthetic instruments were created.

  12. KidDynamite says:

    this is Chuck Schumer being in the pocket of the NYSE, manifested in its clearest state – he’s the driving force behind it. If you don’t understand, the NYSE get’s hosed when all the volume migrates to these alternative exchanges – so Schumer lobbies on their behalf to get the competition shut down, and bring the volume back to the NYSE.

    The biggest problem is that the public, who clearly hates high frequency trading, has been misinformed into thinking that dark pools are also an “unfair” trading venue where they get taken advantage of. on the contrary – dark pools are the antidote to high frequency trading algo’s: less information = more level playing field.

    there is an embarrassing straw man talking point going around to the tune of “but dark pools let people transact large volume quantities at small volume prices” or some other nonsense about hiding supply and demand and thus somehow “cheating” market dynamics. it’s utter crap: the ideal market, if you don’t like the idea of high frequency traders pattern mapping supply and demand that is visible, is a totally dark market. trades only happen when there is a match – there’s no such thing as buying millions of shares at “small volume” prices – you can only buy them if there is an equal seller on the other side.

    and yes – dark pools report their trades, contrary to another popular misconception.

    you don’t have to like dark pools, but if you don’t like HFT AND You don’t like dark pools, you don’t understand what you’re talking about

  13. dss says:

    Since when is the CFTC obscure? It was the beginning of the end when they passed the Commodity Futures Modernization Act.

    http://www.nytimes.com/2008/11/17/business/17grammside.html?pagewanted=print

    Gramm and the Enron Loophole

    n 2000, Senator Phil Gramm played a central role in writing the Commodity Futures Modernization Act, a law that would open the door to unregulated trading of credit default swaps, the financial instruments blamed, in part, for the current economic meltdown.

    But there was another aspect of this legislation that, earlier this decade, helped produce another financial meltdown: the collapse of Enron, the Texas energy company.

    The commodity futures act, in addition to allowing unregulated trading of financial derivatives, included language advocated by Enron that largely exempted the company from regulation of its energy trading on electronic commodity markets, like its once-popular Enron Online. The provision came to be known as the Enron Loophole.

  14. alfred e says:

    @KD: So, am I hearing that banning most but not all dark trading is a political cover for continuing HFT and front running?

  15. KD,

    sounds the right note when drawing attention to the Fact that Schumer is, one of, the main proponents of this move..

    acting like shutting down ‘dark pools’ is a “Major Reform” is to be, somewhat, tone deaf.

    there are some academic points to be made about the effect of disaggregating volume on ‘market pricing’, but there are bigger Fish to Fry.
    “Now that for the first time since its creation the highly secretive Federal Reserve is starting to be brought out into the light as to its real purpose and counterproductive practices which harm, rather than help the economy.

    While everyone should get a copy of Ron Paul’s “End the Fed,” to be available on September 16 but can be preordered now, there is another great book by Murray Rothbard called “The Case Against the Fed,” where anyone wanting to discover the history of the Federal Reserve and the real motivations behind creating it by some of the major bankers of that time, can delve into the highly readable book and have their eyes opened to the extraordinary events and personalities involved with it, and more importantly, what the terrible effects of its creation has brought about.
    At the beginning of the book Rothbard deals with the biggest weakness in our present banking system: fractional reserve banking. He talks about and exposes how the banking system would collapse if there were runs on the bank because reserves are so low in contrast to the money floating around and being used in the economy.
    When you hear about increasing reserves in the financial media, this is what it’s talking about: banks having more money in reserve to fight off circumstances like we’re in today, where the taxpayers have to bail out the banks which can’t meet their commitments.

    The other major point made by Rothbard is in reference to inflation, which he asserts is caused solely by the Federal Reserve. If Americans and others around the world ever really understand the causes and devastation of inflation, it would incite a revolution in the financial industry, and one that would help sweep away the dross of the Federal Reserve and its fruit of inflation. Anyway, Rothbard hits it hard to show the reality of that powerful dynamic and how we need to fight against it…”
    http://www.americanbankingnews.com/2009/09/05/review-of-murray-rothbards-the-case-against-the-fed/

  16. what_what_what says:

    Everyone please remember the equation is: more regulations=the more middle men for a given transaction (e.g. more people get a “cut” of the action). Who should be the “middle men or women” in these transactions? The high price regulatory lawyers and accountants, the exchanges, the regulator that gets paid a salary, or the business person with a whole heck of a lot of incentive to “make a deal”. I don’t know, do you all thing the SEC knows?

  17. KidDynamite says:

    @Alfred – i don’t think that the war on dark pools is a political effort to maintain the status quo in HFT – on the contrary – i think the people attacking HFT, such as Schumer and Senator Kaufman, are simply trying to pander to their populaces… and they also think their populaces are anti-dark-pools, which makes absolutely no sense (to be against HFT and dark pools)… additionally, Schumer is indubitably in the pocket of the NYSE – and he wants dark pools reduced because they take NYSE’s market share.

    basically, i think it’s politicians trying to say “LOOK – we’re fighting for you – we want to get rid of the high frequency computers that are ripping you off” (their paraphrased words, not mine) and then “look – we’re fighting for you – getting rid of those shady execution venues where unregulated trading takes place” – even though dark pools are a philosophically and practically brilliant marketplace, which I will get to in a future post.

  18. bergsten says:

    “Propose toughening”
    I’m all a shiver.

  19. investorinpa says:

    Anybody see or post this article yet? It has the 16 people that were made to look like Idiots during this market rally….pretty heady company http://www.businessinsider.com/the-idiot-maker-rally-2009-10