Independents Benefit From ‘Dark Pool’ Access

Gill Allen/Bloomberg

Simon Mundy wrote earlier this week in the Financial Times that a small number of independent stockbrokers have started offering access to “dark” trading platforms, profiting from a phenomenon that many peers say has contributed towards the industry’s dwindling revenue base.

Dark pools have become increasingly popular over the past decade largely because, unlike “lit” venues such as the London Stock Exchange, they enable investors to buy or sell large blocks of stock without publicising their position and running the risk of moving the security’s price.

Investors can deal directly on most dark platforms, and the cost of execution is typically much lower than the broking commission paid when trading on a lit exchange. Some smaller stockbrokers say that the growth of dark pools has contributed to their lower trading volumes and the pressure on commissions that has left many struggling to stay in profit.

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