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Day: November 15, 2018

Dark Pool Fined $12 Million for Sending Trade Data to HFTs

The SEC fined a large dark pool $12 Million for sending confidential trading data to third party high frequency traders over an eight-year period.  The information included daily aggregated order and execution information and suggested that the recipient HFTs use the reports to identify unsatisfied liquidity needs.  The SEC also faults the firm for allowing unfettered access to trading data by sales and trading personnel.  While engaging in the alleged activity, the respondent consistently advertised the confidentiality of the trading information through the dark pool.

The whole point of trading through the dark pool was to avoid signaling to HFTs.  Yet, this firm allegedly exploited its trusted position by using the dark pool to court large, presumably profitable, third party market players.