Salient to Investors:

Robert Battalio at Notre Dame said:

  • Dark pools have existed forever: shut them down and new forms will arise elsewhere because money managers are too fond of them.
  • Order flow will always have multiple venues to execute on because one size does not fit all.
  • Brokers favor their own needs over customers’, often sending stock orders to exchanges that pay the most.

Dark pools et al account for almost 40 percent of US equity volume.

BlackRock said dark pools are an invaluable execution tool for large orders and stocks that may be more difficult to trade because of wide spreads or low liquidity.

Niamh Alexander at Keefe, Bruyette & Woods said clients have become much more cautious and careful about where their order flow is going.

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