15 August, AtoZ Markets– JPMorgan Chase & Co has begun trading on a new private stock trading venue called the "dark pool". The new stock trading algorithm lets its clients use the bank's algorithms to buy or sell stocks at a benchmark price reached over a period of time.
JPMorgan launches algorithmic stocks trading called 'dark pool'
In finance, a dark pool (black pool) is a private forum for trading securities, derivatives, and other financial instruments. Liquidity on these markets is known as the dark pool liquidity. The new algorithmic trading is also named as JPBX. Moreover, trading in the new dark pool began on July 17. The move comes at a time of increased regulatory scrutiny of dark pools that has led to a number of trading venues being closed. Also, the JP Morgan Chase & Co efforts to expand its business in equities.
JPMorgan's securities unit likewise also runs JPMX, a dark pool that matches the stocks in a traditional way. The best offer and offer costs within the spread appeared on open stock trades like those running by Nasdaq Inc. Brokers hoping to get benchmark price for their orders can get to the new dark pool through JPMorgan's calculations.
Moreover, the JP Morgan plans to fully launch the dark pool by the end of the month.
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Decrease in 'Dark Pool'
Nearly every major bank has a dark pool, a trading venue that does not have to provide information such as trade sizes or prices to the public prior to trades taking place. The aim of getting large orders done with minimal price fluctuations. Dark pools have historically been lightly regulated when compared with various other public exchanges. Also, the dark pool come under increased scrutiny, driving up legal, compliance, and technology costs for the firms. Over the past several years, the number of dark pools has decreased to around 30.
According to FINRA, for the week of July 24, 417,289 shares were crossed on 3,636 orders in JPBX, up from 2,220 shares on 16 orders the previous week.
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