A new report reviewed by ValueWalk to be released on Monday shows dark pools account for 43.6 percent of overall stock trading volume while single dealer platforms comprise 17.6 percent of volume.

Tabb New Report Dark Pool

Dark pool volume consists of retail wholesalers

The report, “US Equity Market Structure: Q1-2014 Market Metrics,” released by New York based Tabb Group, defines “dark volume” as consisting of retail wholesalers, dark ATSs, hidden exchange and Single-Dealer Platforms (SDPs).

Dark pool volume consisted of 84.3 percent dark automated trading systems and 15.7 percent single dealer platforms, the report ntoes. In the same time period, report author Sayena Mostowfi says lit exchange and lit ATS accounted for 56.4% of industry volume.

“Sometimes, people don’t let facts get in the way of a good story,” writes Mostowfi, as she considers the dark pool trading regulations being considered by the Securities and Exchange Commission.  “We would like to believe those types of discussions about the equity markets are behind us. We are encouraged by Mary Jo White’s 13 directives for enhancing our equity market structure and look forward to the clear-eyed, unbiased and fact-based assessments in the coming months.”

In the speech, White outlined 13 primary goals that were broken down into six categories by Tabb Group: Preventing market instability; addressing market fairness; enhancing transparency; mitigating broker conflicts, building quality markets for smaller companies, and looking ahead.

White discusses aspect of HFT

In her speech White sounded tough as she addressed key points to consider, including addressing what is considered the most dangerous, but little discussed, aspect of HFT: flash crashes.  In looking at “Anti-Disruptive trading that could be a result of manipulation – a major behind the scenes concern or regulators and financial reformers – could be the most important, ValueWalk reported after the speech.

To develop their report, Tabb combined data from the SEC’s market structure web site and used rules 605 and 606, disclosure documents, self-reported dark pool volumes and SIP data to bring forth the report. The report drills down to report dark pool and retail wholesaler market share from firms such as Citadel and it incorporates exchange hidden volume in its study along with analysis of various order types.

The report will be available Monday at www.TabbGroup.com