Dark Pools V: addressing Conspiracies

Link to previous segments;
Dark Pools I: A Primer to Darkness
Dark Pools II: Do they Exist? A TLDR inside.
Dark Pools III: Specific types of Dark Pools
Dark Pools IV: History and Possible Origin Story

So spelling some letters to help dis-pell some myths and rumors.

There’s a lot of ‘experts’ that weigh in on Dark Pools, I’m going to debunk a few and clarify some others.

Basically, just like them, especially me, we all have no idea what we’re talking about when we say ‘Dark Pools’. Simply because that word is too vague, but let’s address some of the ‘Conspiracies’.

“Dark Pools Don’t exist”

Simply, people say that Dark pools don’t exist, and the general census is that people will make fun of you for talking about it.

It’s the typical ‘write if off and call this guy an idiot by attacking his character’ CIA playbook, hence the origination of the term ‘conspiracy’. Typical playbook 101.

-Source
“These darks pools you are reffering to, are merely* internet conspiracies”

Simply, people say Dark pools don’t exist. They are probably mis-informed. Which is bad if you work for a brokerage. . . Ahem

And even some News sources or maybe what you thought were credible people, probably said Dark Pools didn’t exist. Well, they’re wrong or misinformed, or lied, or whatever.

Moving on,

This CNBC article;

At that time of writing in 2013, the CEO of PDQ enterprises says that Dark Pools aren’t pure anarchy.

Which, To some cases, he’s right. But in some other cases, it is the case, That Dark Pools can be the “Wild Wild West” As said by Dr. Robert Shapiro who got stiffed by the SEC over regulations. . . lmao

Dr. Robert Shapiro being Bill Clinton’s Undersecretary of Commerce. He would later be senior economic advisor to Vice President Al Gore and Senator John Kerry in their presidential campaigns. So, a pretty reputable guy to literally call Dark Pools like the Wild Wild West. Ha, jokes.

The PDQ CEO also thinks that Dark Pools are highly regulated;

No, they’re just lightly regulated
or Darkly? lmao, puns.
-Source
But you’ll learn later that that’s not always the case
Because sometimes we say one thing,
and don’t understand the entirety of it.
Uh, just keep reading. . .

There was a lot more that the CEO talked about, fairly on point statements. I think CNBC probably tried to get small soundbites for quotes on very complex stuff, so I don’t blame the CEO for the answers. I mean, not every CEO knows how their company works, hell do you even know how your body works?

And yet you’re still running your body like the CEO.

Turns out, you’re probably a shitty president for the 7 trillion or so resident cells in your body. But, I mean, so what.

What so there is a lot of room for error and people want to believe that things work in a simple Occam’s Razer type way. I don’t blame them, but I definitely blame CNBC, probably.

Here is,

A 2014 Bloomberg article saying that Dark Pools have many conspiracy theories, some of which is selling Customer Order Data;

But,

Payment for Order Flow Literally exists, and Brokerages route their Order Flow (sold data and all) to Dark Pool owners and/or internalisers which leads to being Front Ran. . .

Payment for Order Flow is quite literally selling the customer data via order routing for sweet sweet rebate points and making money. PFOF is a complete industry standardized scam, but that’s for another day.

-Source
PFOF to learn more

And if you know anything about the Market Makers, it’s that they’ve combined HFTs and Dark Pools. So HFTs do dice up orders in Dark Pools. Which ones? IDK off the top of my head. If only there were some highlighted statements and FINRA fines that could help point to the bad Market Makers.

If only.

So yes, Dark Pools have been known to use HFTs to Dice up orders and front run them or manipulate prices. I’m telling you this is a thing, I’m not saying who is or isn’t responsible for it.

People genuinely believe the Dark Pools have to abide by NBBO;

That’s not always the case.

No Guarantee that trades are executed at the best price.

So here’s another example of that;

-Source
Also Note that the SEC Chair, Gary Gensler states;
“Dark pools and wholesalers are not reflected in the NBBO”

Let me say that again while putting emphasis that the Chairman of the Securities and Exchange Commission literally said;

“DARK POOLS AND WHOLESALERS ARE NOT REFLECTED IN THE NBBO”

Just a little louder for the people in the back, you know, they have hard hearing or something.

Also, here’s another good quote by the SEC chair;

“Thus, significant trading interest on these platforms is not necessarily being reflected in the commonly cited National Best Bid and Offer quote”

Look, I don’t like the SEC, I never did, and probably won’t. But At face value, it’s unlikely that the Chairmen of the SEC would create TWO quotes saying the NBBO means jack shit when it comes to Dark Pools.

So let me once again make it louder for the people in the back;

-Paraphrasing the SEC Chairmen

To be fair, I am not implying that ALL Dark Pools Don’t Abide by the NBBO.
Just that some do, some don’t, some trades do, some trades don’t.
Think of the NBBO like the speed limit and each car their own Dark Pool,
Are you really doing 35 mph when the sign says 30?

Also, if “the NBBO is only as good as the Market itself” (quote by the Chairman), then the SEC Chairman is basically saying that the market is rigged and it’s shit.

Because if Dark Pools account for more than half of all trades (about 53%, or 70% if you go by 2009 data), and all trades aren’t (always) reflect in the NBBO. . .

Then the NBBO is getting less than half of ALL the trades.

Meaning that the Market itself is Dark and shitty.

Because NBBO is only indicative of less than half of all trades.

That means that the Price isn’t even close to being the True Valuation.

Meaning that we have a Clown Circus Casino running the show with made up prices.

The Price is Wrong Bitch.

(This is technically an improper use of formal logic, but it appeals to sound logic. As in, it sounds like logic. lmao. But if you don’t know what sophistry I wrote, then just hit the ‘I Believe’ Button and move on.)

But, I mean, if it took you until now to learn that the market is rigged and Price discovery is an adulterated and coveted soggy biscuit (by-Hand-Job-Market-Manipulating), then you’re behind the curve.

Here is another Conspiracy, that Dark Pools were created to avoid HFTs,

European Principal Traders Association for Europe’s Markets and Dark Pools;

So the Euro Trade-tards think Dark Pools weren’t created to avoid HFTs. I’m not sure why that’s a myth, I mean, they’re not wrong, but they are misleading.

Because Dark Pools can avoid HFTs, but they were created before HFTs. We’ve already covered this.

But we haven’t covered HOW Dark Pools USE HFTs and created a pretty crazy racket. Not gunna lie.

Idk, Euro Trade Tards sound a bit like they’re justifying and sucking the dick of Dark Pools. It’s overly Fanboy-stanning Dark Pools. Which sort of suggest that the Euro Markets are compromised if they are defending Dark Pools and spouting anti-conspiracy-conspiracy talk.

Anyways,

What I’m trying to say is, people are quick to say something is wrong, but may be operating out of some out-dated or false information.

And mainly that’s my fault, because I’m spinning a Yellow Journalistic view for the reader (ala you) to side with me. It’s my fault because I’m picking easy targets to debunk and further solidify the conspiracy or whatever the fuck I’m trying to say.

It’s Yellow Cake Journalism baby, you can have your Uranium and Eat it too!

Hopefully this meme makes sense;

Turns out, people don’t know what the fuck they’re talking about

I kind of wrote that meme with some little Tarded-ly sprinkled in, hoping it makes sense that the Yellow Journalistic font is the interjections and calling people out as clowns.

It’s a Clown world alright,

In Closing

Dark Pools are totally tools, and a part of keeping tools sharp and useful, is to make sure no one knows the full capabilities of the tool. It’s like the first thing on the cover of ‘The Art of War’ or something. . . probably.

I mean, would you tell the enemy your tank specs? your Armor plating? The reach of your jabs? Your Weapon capabilities? No?

Well why the fuck would you let the public know the full capabilities of a financial weapon used to usurp wealth? Turns out, not everyone is in the need-to-know, so keep it a secret and spread some falsehoods to make people believe that the reality is an implausible impossibility.

Simply make other people sound crazy, and that way you don’t really know the true strength of the real weapons.

Keep the public in the dark about dark pools, sounds good.

Call them Conspiracy theorists and tell them to take their schizo meds. Easy.

So, just know, that when someone mentions ‘Dark Pools’ that it’s a stupid word and they probably don’t even know what they’re talking about. Hell, I don’t know what I’m talking about, so you definitely don’t either.

That’s probably a confusingly safe bet, so let’s not bet on it.

The real take away here is this meme/quote/graphic I made;

-Paraphrasing the SEC Chairmen

As Always,

*Not Valid Financial, Legal, Life, or Any Advice


Side Note;

I’m pretty sure all the Financial Crime and Expose’ that I’ve covered would’ve won me a few prizes or something.

But since I treat them all as a joke and all as a comedic shit post, I see why they don’t get much traction.

Oh well, Guess that means it’s all secret knowledge for you, the reader, to chow down.

If you ever meet me in real life, Tell me I’m a Nutjob and specifically to ‘Take my Schizo meds’ and I’ll treat you like a fren. Drinks are on me at that point, cheers.

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