“Dark Pools” and the Investor

Tens of millions of shares are traded each day in what are referred to as “Dark Pools.” Quotes are listed after the trades are done. The pools are automated and enable institutional investors such as pension and mutual funds to quietly buy and sell their holdings. This helps them execute very large transactions without divulging their intentions.

The upshot? Pension and mutual funds and their small investor clients, benefit from lower cost transactions and lower prices.

But as you would expect. the Securities and Exchange Commission, in its bureaucratic wisdom, has just recently come down on the side of more disclosure, for disclosure’s sake. Politics for the masses, to the detriment of the masses.