The Rise of Dark Pools: Impact on Price Discovery and Market Quality
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Authors
Mickus, Andrew
Issue Date
2012
Type
Thesis
Language
en_US
Keywords
Alternative Title
Abstract
Market structure in the U.S. is complex and filled with numerous regulations matched
only by the number of people trying to circumvent them. This paper examines a specific
segment of the market- dark pools. Specifically, it looks at the possibility that dark
pools, when placed alongside public exchanges, adversely affect the price discovery
process, and therefore general market quality. The validity of this claim is inspected both
empirically and theoretically. A literature review of Haoxiang Zhu's thesis "Do Dark
Pools Harm Price Discovery?" provides a quantitative perspective that shows that, under
normal conditions, the addition of a specific type of dark pool will not harm the price
discovery process and will, in fact, reduce excess market noise. This work can provide an
important backdrop in determining current and future regulatory practices designed to
protect and serve investors.
Description
vi, 26 p.
Citation
Publisher
Kalamazoo College
License
U.S. copyright laws protect this material. Commercial use or distribution of this material is not permitted without prior written permission of the copyright holder.