Dark pools are the unregulated stock exchanges currently under scrutiny for potentially illegal market rigging activities.
We were not asking for trade secrets or results of examinations. We simply wanted basic information on how the Apogee dark pool operates in the marketplace. Mary Jo White, Chair of the SEC, has promised greater transparency by her agency, and yet, this very basic level of information was denied. To put that number in perspective, if an individual broker had 26 violations on his public record he would have a very difficult time getting hired by a reputable firm. Bad brokers with long histories of misconduct do sometimes get hired, unfortunately, because disciplinary records are expunged from the public record as part of settlement agreements.
Citadel paid the fines in the typical manner, without admitting or denying the charges.
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This excessive messaging activity, which involved hundreds of thousands of orders for more than 19 million shares, occurred two to three times per day. A wash sale is where the buyer and the seller are the same entity and no change in beneficial ownership occurs.
Wash sales are illegal because they can manipulate stock prices up or down. They played a major role in the rigged stock market that crashed in Despite the seriousness of the market violations that Citadel has committed — 26 times — no prosecution has occurred and no one has gone to jail.
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SEC bids to shed light on dark pools. News in your inbox For Finextra's free daily newsletter, breaking news and flashes and weekly job board. Wholesale banking Trade execution. Algo traders and dark pools under fire as US senator calls for market review 26 August 0. In a letter to SEC chairman Mary Schapiro, Kaufman calls for an independent "zero-based regulatory review" of a broad range of market structure issues before "piecemeal changes" make matters worse. He suggests conflicts of interest are leading to failures to protect retail investor orders from strategies deployed by high frequency traders.
The senator also claims that rules meant to strengthen public order display instead have led to the proliferation of dark pools. Rules have spurred competition with the exchanges, leading to 50 or more execution venues, says Kaufman. Kaufman says flash orders should be banned while high frequency trading strategies that take advantage of market structure latencies should be "subjected to a searching examination" and in some cases possibly prohibited. Liquidity rebates should be reconsidered, co-location of servers at execution venues should be regulated by the SEC to ensure "fair access" and that auditing of execution at all market centres should be uniform and improved.
The SEC has already moved to outlaw flash trading as part of a wider look at dark pools and high-frequency trading following an intervention from another senator, Charles Schumer. Fighting fraudulent digital account opening with global digital intelligence. Mastercard unveils global trade platform.
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Direct Edge CEO hits back over flash orders.