Dark Pools

Dark Pools

The Rise of the Machine Traders and the Rigging of the U.S. Stock Market

Paperback - 2013
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A news-breaking account of the global stock market's subterranean battles, Dark Pools portrays the rise of the "bots"--artificially intelligent systems that execute trades in milliseconds and use the cover of darkness to out-maneuver the humans who've created them.

In the beginning was Josh Levine, an idealistic programming genius who dreamed of wresting control of the market from the big exchanges that, again and again, gave the giant institutions an advantage over the little guy. Levine created a computerized trading hub named Island where small traders swapped stocks, and over time his invention morphed into a global electronic stock market that sent trillions in capital through a vast jungle of fiber-optic cables.

By then, the market that Levine had sought to fix had turned upside down, birthing secretive exchanges called dark pools and a new species of trading machines that could think, and that seemed, ominously, to be slipping the control of their human masters.

Dark Pools is the fascinating story of how global markets have been hijacked by trading robots--many so self-directed that humans can't predict what they'll do next.
Publisher: New York : Crown Business, [2013]
Edition: First paperback edition.
ISBN: 9780307887184
Characteristics: xiv, 362 pages ; 21 cm


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Dec 04, 2017

From the link:

Wall Street Journal reporter, Scott Patterson, released a 354-page book in 2012 that took a hard look at U.S. market structure. It was titled: Dark Pools: High Speed Traders, A.I. Bandits, and the Threat to the Global Financial System. On page 339 of his book, Patterson writes in the notes section:
“The title of this book doesn’t entirely refer to what is technically known in the financial industry as a ‘dark pool.’ Narrowly defined, dark pool refers to a trading venue that masks buy and sell orders from the public market. Rather, I argue in this book that the entire United States stock market has become one vast dark pool. Orders are hidden in every part of the market. And the complex algorithm AI-based trading systems that control the ebb and flow of the market are cloaked in secrecy. Investors – and our esteemed regulators – are entirely in the dark because the market is dark.” (The italics in this excerpt are as they appear in the hardcover book.)
[The biz term is, INTERNALIZATION]

Feb 08, 2015

A well written account of the rise of computers in stock trading in the US and how the ECN's took over the staid and corrupt trading from Nasdaq and the NYSE members. The results leading to further seedy behavior from the new participants. The book further looks at what the high frequency trading might trigger a worse situation then the flash crash. The book was lacking footnotes to it's research much of which was interviews or transcripts of interviews. Worth reading.


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