Dark Pools And Flash Orders: The Secret World Of Automated High-Frequency Trading

Abstract

A market should be the purest form of exchange with willing buyers and sellers, with perfect information, agreeing on a price for a stock or commodity. Unfortunately, there are sophisticated computer systems sometimes located in the very building that house the stock or commodity exchange servers, and those computers can execute millions of trades per second. Those computers are even allowed to secretly view available trades before the rest of the general public and sometimes those trades are even clandestinely made, without any broadcast of the buy or sell prices to others. What is clear is that far from being a pure form of exchange, today’s market is heavily skewed, with the average consumer being the loser.