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In finance, dark pools of liquidity (also referred to as dark liquidity or simply dark pools) is trading volume or liquidity that is not openly available to the public.^[1] The bulk of these represent large trades by financial institutions that are offered away from public exchanges so that trades are anonymous. The fragmentation of financial trading venues and electronic trading has allowed dark pools to be created, and they are normally accessed through crossing networks or directly between market participants.

One of the main advantages for institutional investors in using dark pools is for buying or selling large blocks of securities without showing their hand to others and thus avoiding market impact as neither the size of the trade nor the identity are revealed until the trade is filled. But it also means that some market participants are disadvantaged as they cannot see the trades before they are executed; prices are agreed upon by participants in the dark pools, so the market becomes no longer transparent.^[2]

There are three major types of dark pools. The first type is independent companies set up to offer a unique differentiated basis for trading. The second type is broker-owned dark pools where clients of the broker interact, most commonly with other clients of the broker (possibly including its own proprietary traders) in conditions of anonymity. Finally, some public exchanges are creating their own dark pools to allow their clients the benefits of anonymity and non-display of orders while offering an exchange ‘infrastructure’. Depending on the precise way in which a ‘dark’ pool operates and interacts with other venues it may be considered, and indeed referred to by some vendors as a ‘grey’ pool.^[3]

Iceberg orders[link]

Some markets allow dark liquidity to be posted inside the existing limit order book alongside public liquidity, usually through the use of iceberg orders.^[4] Iceberg orders generally specify an additional display quantity, smaller than the overall order quantity. The order is queued along with other orders but only the display quantity is printed to the market depth. When the order reaches the front of its price queue, only the display quantity is filled before the order is automatically put at the back of the queue and must wait for its next chance to get a fill. Such orders will, therefore, get filled less quickly than the fully public equivalent, and they often carry an explicit cost penalty in the form of a larger execution cost charged by the market. Iceberg orders are not truly dark either, as the trade is usually visible after the fact in the market's public trade feed.

Dark pools[link]

Truly dark liquidity can be collected off-market in dark pools. Dark pools are generally very similar to standard markets with similar order types, pricing rules and prioritization rules. However, the liquidity is deliberately not advertised—there is no market depth feed. Such markets have no need of an iceberg order type. In addition, they prefer not to print the trades to any public data feed, or if legally required to do so, will do so with as large a delay as legally possible—all to reduce the market impact of any trade. Dark pools are often formed from brokers' order books and other off-market liquidity. When comparing pools, careful checks should be made as to how liquidity numbers were calculated—some venues count both sides of the trade, or even count liquidity that was posted but not filled.

Dark liquidity pools offer institutional investors many of the efficiencies associated with trading on the exchanges' public limit order books but without showing their actions to others. Dark liquidity pools avoid this risk because neither the price nor the identity of the trading company is displayed.

Dark pools are recorded to the national consolidated tape. However, they are recorded as over-the-counter transactions. Therefore, detailed information about the volumes and types of transactions is left to the crossing network to report to clients if they desire and are contractually obligated.^[5]

Dark pools allow funds to line up and move large blocks of equities without tipping their hands as to what they are up to. Modern trading platforms and the lack of human interaction have reduced the time scale on market movements. This increased responsiveness of the price of an equity to market pressures has made it more difficult to move large blocks of stock without affecting the price. ^[6]

Dark pools are run by private brokerages which operate under fewer regulatory and public disclosure requirements than public exchanges.^[7] Tabb Group estimates trading on the dark pools accounts for 32% of trades in 2012 vs 26% in 2008.^[7]

Price discovery[link]

For an asset that can be only publicly traded, the standard price discovery process is generally assumed to ensure that at any given time the price is approximately "correct" or "fair". However, very few assets are in this category since most can be traded off market without printing the trade to a publicly accessible data source. As the proportion of the daily volume of the asset that is traded in such a hidden manner increases, the public price might still be considered fair. However, if public trading continues to decrease as hidden trading increases, it can be seen that the public price does not take into account all information about the asset (in particular it does not take into account what was traded but hidden)—and thus the public price may no longer be "fair".

Market impact[link]

Whilst it is safe to say that trading on a dark venue will reduce market impact it must be noted that it is very unlikely to reduce it to zero. In particular the liquidity that crosses with you has to come from somewhere—and at least some of it is likely to come from the public market, as automated broker systems intercept market-bound orders and instead cross them with you. This disappearance of the opposite side liquidity as it trades with you and leaves the market will cause impact. In addition, your order will slow down the market movement in the direction favorable to you and speed it up in the direction unfavorable to you. The market impact of your hidden liquidity is greatest when all of the public liquidity has a chance to cross with you and least when you are able to cross with only other hidden liquidity that is not also represented on the market. In other words, you still have a trade-off: reduce your speed of execution by crossing with only dark liquidity or increase it and increase your market impact.

Adverse selection[link]

One potential problem with crossing networks is winner's curse. Generally if you are completely filled, it implies that the counterparty actually had more liquidity behind their order than you did in yours. If you are slicing many small orders across time, this would not be meaningful. However if you are trading large volumes then it can be assumed that the other side - being even larger - will be likely to cause market impact and thus push the price against you. So the fact that you got filled is an indicator that you actually didn't want to get filled - it would have been better to wait until the price had been pushed and then cross.

Another type of adverse selection is caused on a very short-term basis by the economics of dark pools versus displayed markets. If a buy-side institution adds liquidity in the open market, a prop desk at a bank may want to take that liquidity because they have a short-term need. The prop desk would have to pay an Exchange/ECN access fee to take the liquidity in the displayed market. On the other hand, if the buy-side institution were floating their order in the prop desk's broker dark pool, then the economics make it very favorable to the prop desk: They pay little or no access fee to access their own dark pool, and the parent broker gets tape revenue for printing the trade on an exchange. For this reason, it is recommended that when you are transacting in smaller sizes and do not have short-term alpha, do not add liquidity to dark pools; rather, go to the open market where the short-term adverse selection is likely to be less severe.

Controversy[link]

The use of dark pools for trading has also attracted controversy. In one case, Pipeline LLC, a company offering its services as a dark pool, had contracted an affiliate that transacted the trades.^[8]

In the Pipeline case, the firm began in an attempt to provide a trading system that would protect investors from the open, public electronic marketplace. In that system, investors' orders would be made public on the consolidated tape as soon as they were announced, which traders characterized as "playing poker with your cards face up." The service Pipeline offered was to find counterparties for various trades in a private manner.

Regulatory statements[link]

In 2009 the Securities and Exchange Commission (SEC) announced that it was proposing measures to increase the transparency of dark pools, "so investors get a clearer view of stock prices and liquidity." These requirements would involve that information about investor interest in buying or selling stock be made available to the public, instead of to only the members of a dark pools.^[9]

List of dark pools[link]

Independent dark pools[link]

• TORA Crosspoint
• Instinet
• SmartPool
• Posit/MatchNow from Investment Technology Group (ITG)
• Liquidnet
• NYFIX Millennium
• Pulse Trading BlockCross
• RiverCross
• Pipeline Trading Systems LLC (later changed name to Aritas Securities LLC)

Broker-dealer-owned dark pools[link]

• Barclays Capital - LX Liquidity Cross
• BNP Paribas
• BNY ConvergEx Group (an affiliate of Bank of New York Mellon)
• Citi - Citi Match
• Credit Agricole Cheuvreux - BLINK
• Credit Suisse - CrossFinder
• Fidelity Capital Markets
• GETCO - GETMatched
• Goldman Sachs SIGMA X
• Knight Capital Group - Knight Link, Knight Match
• Deutsche Bank Global Markets - DBA(Europe), SuperX ATS (US)
• Merrill Lynch - MLXN
• Morgan Stanley
• Nomura - Nomura NX
• UBS Investment Bank - UBS MTF
• Ballista ATS Ballista Securities LLC^{[citation needed]}
• BlocSec^{[citation needed]}
• Bloomberg Tradebook (an affiliate of Bloomberg L.P.)
• Daiwa - DRECT

Consortium-owned dark pools[link]

• BIDS Trading - BIDS ATS
• LeveL ATS

Exchange-owned dark pools[link]

• International Securities Exchange
• NYSE Euronext
• BATS Trading
• Direct Edge
• Swiss Block^{[citation needed]}
• Nordic@Mid^{[citation needed]}

Other dark pools[link]

• Chi-X
• Turquoise

Dark pool aggregators[link]

• Bloomberg Tradebook
• Fidessa - Spotlight
• SuperX+ – Deutsche Bank
• ASOR – Quod Financial
• Progress Apama
• ONEPIPE – Weeden & Co. & Pragma Financial
• Xasax Corporation
• Crossfire – Credit Agricole Cheuvreux

See also[link]

• Algorithmic trading
• Electronic communication network

References[link]

1. ^ "Glossary - Dark Pools". Investopedia. http://www.investopedia.com/terms/d/dark_pool_liquidity.asp. Retrieved 2011-06-20. 
2. ^ "Glossary - Dark Pools". AT Monitor. http://www.atmonitor.co.uk/glossary.aspx?id=146. Retrieved June 18, 2011. 
3. ^ http://www.atmonitor.co.uk/glossary.aspx?id=146
4. ^ www.tsx.com
5. ^ http://www.quantprinciple.com/invest/index.php/docs/realworld/darkpools/#tape Consolidated tape and DARK Pools
6. ^ http://www.quantprinciple.com/invest/index.php/docs/realworld/darkpools/ Dark Pools some reasons
7. ^ ^{a b} Philips, Matthew (May 10, 2012). "Where Has All the Stock Trading Gone?". Bloomberg Businessweek. http://www.businessweek.com/articles/2012-05-10/where-has-all-the-stock-trading-gone. 
8. ^ Scott Patterson and Jenny Strasburg, "Traders Navigate a Murky New World," Wall Street Journal, April 9, 2012.
9. ^ Securities and Exchange Commission, "SEC Issues Proposals to Shed Greater Light on Dark Pools," Oct. 21 2009, accessed May 25 2012, http://www.sec.gov/news/press/2009/2009-223.htm

External links[link]

• "Big Traders Dive Into Dark Pools"
• "Dark Pool Article On Quant Principle"

Jacqueline Kay Swinburne (born 8 June 1967) is a Welsh politician. She is a Conservative Member of the European Parliament for Wales.

Background[link]

Born and raised in west Wales, Swinburne was educated at Llandysul Grammar School and went on to earn a degree in Biochemistry and Microbiology from King's College London, followed by a Ph.D. in medical research and an MBA from the University of Surrey, before starting a successful career in international healthcare and finance.^[1] Swinburne first came to national attention in 1999 when she resigned from Deutsche Bank after being a victim of sexual discrimination.^[2]

Political career[link]

Swinburne is a former Conservative Councillor in Hereford, serving as Chair Health Scrutiny, former Town Mayor for Ledbury, former Deputy Chair NHCA. On 28 March 2008 it was announced that she was to head the Welsh Conservatives' list of candidates for the 2009 European Parliament election, effectively guaranteeing her a seat in the European Parliament.^[3] Her election in June 2009 was notable for being the first time the Conservatives topped an election in Wales since 1918.

In the European Parliament, Swinburne sits in the European Conservatives and Reformists Group. She is a member of the Committee on Economic and Monetary Affairs.

References[link]

External links[link]

• Welsh Conservatives Website
• Q&A Session for ConservativeHome
• Kay Swinburne's website

Howard Thomas CBE (c.1909—6 November 1986) was a Welsh-born British radio producer and television executive.

Early career[link]

Thomas began his career typing invoices for a firm of wire-drawers in Manchester. While doing that job, he taught himself to write newspaper articles and short plays. When some of these articles were published, he managed to get a job in the firm's advertising department. That job enabled Thomas to mix with advertising agents and through networking he obtained a position with F John Roe, one of Manchester's advertising agencies.

He moved to the London agency F C Prichard Wood and Partners, and he continued to write articles, having a London entertainment column in the Manchester Evening Chronicle. This column was spotted by the London Press Exchange and he was hired by them as a copywriter.

Commercial radio[link]

At London Press Exchange, Thomas worked in the commercial radio section, at first writing, then producing commercial packages for companies including Cadbury's. These packages, usually of music or variety acts interspersed with subtle commercials for the sponsor, were then placed on Radio Luxembourg and similar longwave broadcasters who could be heard in the UK.

In this position he came to the attention of the BBC, and he began to submit scripts and programme ideas to them while continuing to work for the international commercial broadcasters. However, at the outbreak of World War II, the commercial broadcasters closed and the advertising market contracted. Thomas kept his post at London Press Exchange, but effectively had no work to do. He attempted to fill time by writing books about the blackout and writing more articles for newspapers, and also worked for Publicity Films Limited producing public information films.

BBC radio[link]

On the outbreak of war, the BBC had closed its existing two Regional Programme and National Programme stations and replaced them with a single national station, the Home Service (now BBC Radio 4).

This move was criticised as it led to boredom amongst the listeners during the Phony War, who were also faced with cinemas and sporting events being closed "for the duration" and the loss of the competition to the BBC.

As the Phony War ended, the BBC decided to introduce an entertainment-based national radio station, primarily for the men under arms. The new service, the Forces Programme hired many new producers from the former commercial agencies, including Howard Thomas.

[edit] Ack Ack Beer Beer

Thomas's first assignment was to produce the programme Ack Ack Beer Beer, an entertainment and variety programme for anti-aircraft and barrage balloon emplacements. Both jobs featured very little action and therefore the BBC felt that 'lively' entertainment had to be provided for the crews.

Under Thomas, the programme developed into a miscellany of variety, talk, music and comedy, using whatever talent was available near the evacuated Variety Department's studios in Bristol. On occasion this was no talent at all, and Thomas later told of an edition made up of him and his co-producer playing "Shove ha'penny", which had the side effect of reintroducing the game to the population.

[edit] Sincerely Yours, Vera Lynn

With Bristol now a victim of the Blitz, the Variety Department moved to Bangor in north Wales. However, feeling that opportunities for variety would be limited there, Thomas engineered a move back to London.

In London he spotted singer Vera Lynn in a stage show. He created a radio programme for her called Sincerely Yours, Vera Lynn where she sang popular tunes of the time, read out letters from servicemen and introduced entertainers.

The show was a hit, both with the forces and the country at large, although the senior officers of both the British Army and the Royal Navy strongly objected to the sentimental and "soppy" music and presentation. Nevertheless, the show helped turn the song "We'll Meet Again" into one of the best selling pieces of music throughout the war. The show also cemented Vera Lynn's title of "forces' sweetheart" and ensured that she would remain, as of 2006, something akin to a national treasure in the UK.

To assuage critics of Sincerely Yours, Thomas introduced the programme I Am John Bull, featuring military marches and "strong" music. The programme was not successful.

[edit] Shipmates Ashore

The BBC Forces Programme provided distinct programming for each of the armed services. However, the Merchant Navy, not being classed as an armed service and under the patronage of the Ministry of Labour, was not included.

Howard Thomas began a programme named Shipmates Ashore aimed at this audience. The programme was set in a Merchant Navy club and quickly became an effectively real club, with free beer and "companionship" for visiting merchant seamen. The show featured a mixture of music, singing, comedy and information (in the form of a "ship's newspaper") as well as providing a platform for discussion of issues of interest to the sailors. The programme was presented by Doris Hare.

[edit] The Brains Trust

As conceived by Howard Thomas and Douglas Cleverdon, The Brains Trust was a simple mixture of light panel game entertainment and heavier discussion of items of scientific, legal, medical and social importance. At that time, there was much discussion in the UK about the shape of the world and the country after the war, which reached its peak with the Beveridge Report and the 1945 landslide election of Attlee's Labour government.

The programme featured Professor Cyril E. M. Joad, previously rejected for radio for his strange speaking voice; the writer and zoologist Julian Huxley; and the loud and entertaining Archibald Bruce Campbell. The programme first aired under the title Any Questions? and drew a small audience and few questions. However, within a few weeks it had caught the zeitgeist of the nation, gaining an audience of 11½million. The series was extended from a run of 12 episodes into an open-ended series that ran into the 1950s.

However, the popularity of the programme, dealing as it did with matters of controversy and politics, caused complaints of left-wing bias from within the BBC and from commentators outside. The BBC attempted to modify the format of the programme to avoid this but also sought to avoid damaging the shows popularity. With military criticism of Sincerely Yours, general complaints about the bawdy humour in Shipmates Ashore and political criticism of The Brains Trust, the BBC sought a scapegoat and pressured Howard Thomas to leave. In 1944, he resigned.

British Pathé[link]

On leaving the BBC, Howard Thomas joined the Associated British Picture Corporation as head of British Pathé, the newsreel and film company.

Thomas relaunched the ailing Pathé Gazette as Pathé News, began hiring new camera operators and pioneered the switch to colour film. He also arranged for the Pathé archives, then of little or no intrinsic value to the company, to be indexed and properly preserved for future use.

ABC-TV[link]

By the 1950s, it was becoming clear that television was eroding the size of cinema audiences. Frustrated at his inability to convince the Associated British Picture Corporation that it should either expand into production of popular feature films or bid for one of the new commercial broadcasting licences offered under the Television Act 1954 by the Independent Television Authority (ITA), Howard Thomas began to look for roles in the new ITV companies that were being started.

He was offered the job of General Manager of Kemsley-Winnick Television, the new weekend contractor for the midlands and north of England. However, before he could take up the job, Lord Kemsley pulled out of the company and the contract lapsed.

The ITA made a last-ditch attempt to get the Associated British Picture Corporation involved in commercial television as a replacement for Kemsley-Winnick. The board of the company was finally convinced to try, and signed a contract with the ITA on 21 September 1955 to form Associated British Cinemas (Television) Limited to take over the contract.

Howard Thomas was appointed as managing director of the company and hired Sydney Newman and Brian Tesler as his controllers of drama and light entertainment respectively.

Thames Television[link]

In 1966, the ITA announced that the pattern of broadcasting for Independent Television was to change from 1968. All contractors would be required to reapply for their contracts, and, though there would be one more contract available than before (for Yorkshire), the previous weekend splits in the three central regions of London, the midlands and the north of England would be altered. The London split would change to Friday evenings (rather than the self-contained weekend it had previously been) and the midlands and the north would be redivided into three whole-week regions. ABC's contract area would therefore cease to exist.

Howard Thomas had planned for ABC Television to apply for the extended London weekends contract (with an application for the Midlands seven-day contract as a stand-by). However, the appearance of a consortium of major figures from the BBC and Rediffusion under the leadership of David Frost made this difficult. The London Television Consortium (later London Weekend Television) won the contract, and the ITA was left with no place for ABC.

The ITA's solution was to ask ABC and Rediffusion to merge to form a new company. They specified that ABC would have a slim majority of the shares, and that the managing director would be Howard Thomas. In practice, the merger proved impossible due to outside interests held by both parent companies. Instead, the parent companies formed a joint company called Thames Television Holdings Limited (trading as Thames Television), which took over the staff of ABC in Teddington and a minority of staff from Rediffusion. Management and on-screen talent was mainly provided by ABC.

Thames retained the London weekdays licence until 31 December 1992.

Retirement[link]

The Independent Broadcasting Authority set a limit on the age of managing directors of ITV companies, specifying that they retire at the age of 75.

When Howard Thomas reached this age, Thames Television Holdings (the company that held the shares in Thames formerly held by the now-defunct Associated British Picture Corporation) promoted him from Thames Television to become chairman of Thames Television International - then a subsidiary of Thames but previously known as EMI Films and, before that, the remains of the former ABC owner Associated British Picture Corporation.

Family[link]

Howard Thomas married Hilda in 1934 and they had two daughters, Rosemary and Carol.

He was appointed a Commander of the Order of the British Empire (CBE) in 1967.

See also[link]

• The Avengers
• Armchair Theatre
• Eamonn Andrews

References[link]

• Thomas, Howard With An Independent Air London: Weidenfeld & Nicolson 1977 ISBN 0-297-77278-3
• Sendall, Bernard Independent Television in Britain: Volume 1 - Origin and Foundation 1946-62 London: The Macmillan Press Ltd 1982 (reprinted 1984) ISBN 0-333-30941-3 pp68, 82-84, 312, 359
• Graham, Russ J Howard Thomas: Independent broadcaster TVHeroes from Electromusications by Transdiffusion 2005, accessed 3 February 2006
• Bowden-Smith, Chris (Ed.) ABC at Large Telemusications from Transdiffusion 2002, accessed 3 February 2006
• Elen, Richard G British Film Institute Screenonline - ABC undated, accessed 3 February 2006
• Elen, Richard G British Film Institute Screenonline - Thames undated, accessed 3 February 2006

External links[link]

• Howard Thomas at the Internet Movie Database
• ABC at Large
• Talk of Thames
• British Pathé

Thomas Sales (birth September 5, 1868 in Nottingham, England, United Kingdom-died November 15, 1926) was a Canadian politician and farmer. He was elected to the Canadian House of Commons in the 1921 election as a Member of the Progressive Party representing the riding of Saltcoats.

External links[link]

• Parliament of Canada biography

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