Dark Pools Internalization And Equity Market Quality
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The New Stock Market
| Author | : Merritt B. Fox |
| Publisher | : Columbia University Press |
| Total Pages | : 612 |
| Release | : 2019-01-08 |
| Genre | : Business & Economics |
| ISBN | : 023154393X |
The U.S. stock market has been transformed over the last twenty-five years. Once a market in which human beings traded at human speeds, it is now an electronic market pervaded by algorithmic trading, conducted at speeds nearing that of light. High-frequency traders participate in a large portion of all transactions, and a significant minority of all trade occurs on alternative trading systems known as “dark pools.” These developments have been widely criticized, but there is no consensus on the best regulatory response to these dramatic changes. The New Stock Market offers a comprehensive new look at how these markets work, how they fail, and how they should be regulated. Merritt B. Fox, Lawrence R. Glosten, and Gabriel V. Rauterberg describe stock markets’ institutions and regulatory architecture. They draw on the informational paradigm of microstructure economics to highlight the crucial role of information asymmetries and adverse selection in explaining market behavior, while examining a wide variety of developments in market practices and participants. The result is a compelling account of the stock market’s regulatory framework, fundamental institutions, and economic dynamics, combined with an assessment of its various controversies. The New Stock Market covers a wide range of issues including the practices of high-frequency traders, insider trading, manipulation, short selling, broker-dealer practices, and trading venue fees and rebates. The book illuminates both the existing regulatory structure of our equity trading markets and how we can improve it.
Dark Pools
| Author | : Scott Patterson |
| Publisher | : Crown Currency |
| Total Pages | : 386 |
| Release | : 2012-06-12 |
| Genre | : Business & Economics |
| ISBN | : 0307887197 |
A news-breaking account of the global stock market's subterranean battles, Dark Pools portrays the rise of the "bots"--artificially intelligent systems that execute trades in milliseconds and use the cover of darkness to out-maneuver the humans who've created them. In the beginning was Josh Levine, an idealistic programming genius who dreamed of wresting control of the market from the big exchanges that, again and again, gave the giant institutions an advantage over the little guy. Levine created a computerized trading hub named Island where small traders swapped stocks, and over time his invention morphed into a global electronic stock market that sent trillions in capital through a vast jungle of fiber-optic cables. By then, the market that Levine had sought to fix had turned upside down, birthing secretive exchanges called dark pools and a new species of trading machines that could think, and that seemed, ominously, to be slipping the control of their human masters. Dark Pools is the fascinating story of how global markets have been hijacked by trading robots--many so self-directed that humans can't predict what they'll do next.
Liquidity, Markets and Trading in Action
| Author | : Deniz Ozenbas |
| Publisher | : Springer Nature |
| Total Pages | : 111 |
| Release | : 2022 |
| Genre | : Business enterprises |
| ISBN | : 3030748170 |
This open access book addresses four standard business school subjects: microeconomics, macroeconomics, finance and information systems as they relate to trading, liquidity, and market structure. It provides a detailed examination of the impact of trading costs and other impediments of trading that the authors call rictions It also presents an interactive simulation model of equity market trading, TraderEx, that enables students to implement trading decisions in different market scenarios and structures. Addressing these topics shines a bright light on how a real-world financial market operates, and the simulation provides students with an experiential learning opportunity that is informative and fun. Each of the chapters is designed so that it can be used as a stand-alone module in an existing economics, finance, or information science course. Instructor resources such as discussion questions, Powerpoint slides and TraderEx exercises are available online.
Trading and Electronic Markets: What Investment Professionals Need to Know
| Author | : Larry Harris |
| Publisher | : CFA Institute Research Foundation |
| Total Pages | : 94 |
| Release | : 2015-10-19 |
| Genre | : Business & Economics |
| ISBN | : 1934667927 |
The true meaning of investment discipline is to trade only when you rationally expect that you will achieve your desired objective. Accordingly, managers must thoroughly understand why they trade. Because trading is a zero-sum game, good investment discipline also requires that managers understand why their counterparties trade. This book surveys the many reasons why people trade and identifies the implications of the zero-sum game for investment discipline. It also identifies the origins of liquidity and thus of transaction costs, as well as when active investment strategies are profitable. The book then explains how managers must measure and control transaction costs to perform well. Electronic trading systems and electronic trading strategies now dominate trading in exchange markets throughout the world. The book identifies why speed is of such great importance to electronic traders, how they obtain it, and the trading strategies they use to exploit it. Finally, the book analyzes many issues associated with electronic trading that currently concern practitioners and regulators.
Ensuring Quality to Gain Access to Global Markets
| Author | : Martin Kellermann |
| Publisher | : World Bank Publications |
| Total Pages | : 275 |
| Release | : 2019-04-09 |
| Genre | : Business & Economics |
| ISBN | : 1464813728 |
In a modern world with rapidly growing international trade, countries compete less based on the availability of natural resources, geographical advantages, and lower labor costs and more on factors related to firms' ability to enter and compete in new markets. One such factor is the ability to demonstrate the quality and safety of goods and services expected by consumers and confirm compliance with international standards. To assure such compliance, a sound quality infrastructure (QI) ecosystem is essential. Jointly developed by the World Bank Group and the National Metrology Institute of Germany, this guide is designed to help development partners and governments analyze a country's quality infrastructure ecosystems and provide recommendations to design and implement reforms and enhance the capacity of their QI institutions.
Should dark pools be prohibited?
| Author | : Moritz Meyer |
| Publisher | : GRIN Verlag |
| Total Pages | : 11 |
| Release | : 2018-05-29 |
| Genre | : Business & Economics |
| ISBN | : 3668712778 |
Essay from the year 2017 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 68%, University of Strathclyde, language: English, abstract: Should dark pools be prohibited? Discuss this statement by exclusively presenting arguments that this is not the case. A dark pool is defined by Banks (2010) as an alternative trading system for the anonymous trade of standardised financial products. Pan (2017) specifies it as mainly an equity trading venue. The trades in a dark pool are, according to Ye (2016), concluded outside of any display order. This differs from lit markets, such as traditional stock exchanges, as the trade, according to Comerton-Forde and Putniņš (2015), is only made public after it has been executed. Dark pools are a highly unregulated market sector and not subjected to the rules and regulations of the European stock exchanges, as Baxter (2017) highlights. Petrescu and Wedow (2017) therefore assumed that the key feature of dark pools is less transparency compared to lit markets, i.e. market participants do not have an overview of the supply and demand of the products. The traders purchase and sell on dark pools without showing their identities or exposing transactions to the public market; therefore, the available liquidity in the dark pool is anonymous, as pointed out by Kratz and Schöneborn (2014). The price of a successful order is calculated, as claimed by Banks (2014), as the midpoint of the bid and offer. Zhu (2014) states that the execution of an order in a dark pool is not guaranteed, unlike the traditional stock exchange.
Securities Market Issues for the 21st Century
| Author | : Merritt B. Fox |
| Publisher | : |
| Total Pages | : 476 |
| Release | : 2018 |
| Genre | : Securities |
| ISBN | : 9781982966850 |
Market Liquidity
| Author | : Thierry Foucault |
| Publisher | : Oxford University Press |
| Total Pages | : 531 |
| Release | : 2023 |
| Genre | : Capital market |
| ISBN | : 0197542069 |
"The process by which securities are traded is very different from the idealized picture of a frictionless and self-equilibrating market offered by the typical finance textbook. This book offers a more accurate and authoritative take on this process. The book starts from the assumption that not everyone is present at all times simultaneously on the market, and that participants have quite diverse information about the security's fundamentals. As a result, the order flow is a complex mix of information and noise, and a consensus price only emerges gradually over time as the trading process evolves and the participants interpret the actions of other traders. Thus, a security's actual transaction price may deviate from its fundamental value, as it would be assessed by a fully informed set of investors. The book takes these deviations seriously, and explains why and how they emerge in the trading process and are eventually eliminated. The authors draw on a vast body of theoretical insights and empirical findings on security price formation that have come to form a well-defined field within financial economics known as "market microstructure." Focusing on liquidity and price discovery, the book analyzes the tension between the two, pointing out that when price-relevant information reaches the market through trading pressure rather than through a public announcement, liquidity may suffer. It also confronts many striking phenomena in securities markets and uses the analytical tools and empirical methods of market microstructure to understand them. These include issues such as why liquidity changes over time and differs across securities, why large trades move prices up or down, and why these price changes are subsequently reversed, and why we observe temporary deviations from asset fair values"--
Electronic and Algorithmic Trading Technology
| Author | : Kendall Kim |
| Publisher | : Academic Press |
| Total Pages | : 224 |
| Release | : 2010-07-27 |
| Genre | : Computers |
| ISBN | : 0080548865 |
Electronic and algorithmic trading has become part of a mainstream response to buy-side traders' need to move large blocks of shares with minimum market impact in today's complex institutional trading environment. This book illustrates an overview of key providers in the marketplace. With electronic trading platforms becoming increasingly sophisticated, more cost effective measures handling larger order flow is becoming a reality. The higher reliance on electronic trading has had profound implications for vendors and users of information and trading products. Broker dealers providing solutions through their products are facing changes in their business models such as: relationships with sellside customers, relationships with buyside customers, the importance of broker neutrality, the role of direct market access, and the relationship with prime brokers. Electronic and Algorithmic Trading Technology: The Complete Guide is the ultimate guide to managers, institutional investors, broker dealers, and software vendors to better understand innovative technologies that can cut transaction costs, eliminate human error, boost trading efficiency and supplement productivity. As economic and regulatory pressures are driving financial institutions to seek efficiency gains by improving the quality of software systems, firms are devoting increasing amounts of financial and human capital to maintaining their competitive edge. This book is written to aid the management and development of IT systems for financial institutions. Although the book focuses on the securities industry, its solution framework can be applied to satisfy complex automation requirements within very different sectors of financial services – from payments and cash management, to insurance and securities. Electronic and Algorithmic Trading: The Complete Guide is geared toward all levels of technology, investment management and the financial service professionals responsible for developing and implementing cutting-edge technology. It outlines a complete framework for successfully building a software system that provides the functionalities required by the business model. It is revolutionary as the first guide to cover everything from the technologies to how to evaluate tools to best practices for IT management. - First book to address the hot topic of how systems can be designed to maximize the benefits of program and algorithmic trading - Outlines a complete framework for developing a software system that meets the needs of the firm's business model - Provides a robust system for making the build vs. buy decision based on business requirements
