Trader’s Magazine has a commentary today entitled Dispelling Dark Pool Myths.

http://www.tradersmagazine.com/news/dark-pools-myths-105442-1.html?zkPrintable=true

My comments:

It should not be surprising to any of us that, in such a low volume environment, where any firm relying on commissions is pulling its hair out, we begin to hear employees of firms that operate dark pools and sell algo’s tell us how we should increase our usage of their products by not screening out pools that ping, by further embracing high frequency traffic, and by removing minimum size requirements. Heck, if I were selling you my algo suite, and dark pools as a destination, I would want you to remove those constraints too.

As with all things, we all must perform a balancing act. We must weigh the marginal benefit of additional liquidity, with detrimental leakage and costs associated with interacting with that liquidity. If you are selling 350,000 shares of a stock, and 16,600 shares of the achieved liquidity was damning, and moved your stock an unacceptable amount, then perhaps it is a good thing to weed that marginal liquidity out. Only you, as individual traders, can make that trade-off to suit your needs.

We are encouraged that certain firms are specializing now in actually measuring adverse tick selection across different brokers, as well as destinations, and we think that analysis will go along way to improving buy side transaction costs.