Dark pools in battle with pricing predators

[flashl]

NEW YORK (Reuters) - Investors looking to discreetly buy and sell large blocks of stock may have found a new home in alternative trading venues, known as dark pools, but with each trade they risk falling prey to traders trying to manipulate prices.

Dark pools, anonymous off-exchange stock trading venues where traders can match large orders while concealing price and volume, have been rapidly gaining market share. By allowing traders to hide their cards, the pools limit the impact on stock prices before an order is complete, reducing costs for the trader.

But the very anonymity that draws investors to dark pools also gives cover to those seeking to manipulate the system. And that has forced pool operators to fight back and ramp up their spending on tools they claim will stop predators.

...

Gamers, which is the industry term for the traders who try to manipulate prices in the dark pools, have found that they can exploit the darkness in the pools by finding an information leak others cannot access.

Reuters

"The Games" never end.

[On the Road]

1. That is Interesting

Suddenly accumulation by stealth is much easier, and volume is no longer an accurate indicator.