Both experts and regulators have been zeroing in on high-speed traders.
Through debates and studies, they’ve questioned whether high frequency trading and electronic markets are affecting investors.
But there may be a bigger threat out there, reports Reuters. It finds the proliferation of dark markets, or the increase of trading that’s happening outside of exchanges, may be more dangerous for your clients.
That’s because “so much trading is now happening away from exchanges that publicly quoted prices for stocks on exchanges may no longer properly reflect where the market is,” says Reuters. Though off-exchange trading can benefit investors, it adds, “it’s terrible for the broader market because it reduces price transparency.”
Read more on the potential dangers of dark pools.
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