Iy is illegal to front run the trade but it is certainly legal and actually natural to act after the trade is placed. The only ones that can front run such trades are dark pool operators and nobody can assure us that this won't happen through offshore accounts and sophisticated encrypted messaging. The dark ages of trading are coming.
I've often said to "be careful what you wish for" as it pertains to total tranparency and disclosure etc. We could all end up buying stock at Walmart based on a single price. Markets are markets, and I honestly feel that as long as we have risk takers willing to engage in risk/reward trading, we should all be fine. Adapting is more important than ever, however. Don
Futures only the last few years for me, also. A quick search reveals dark pools are taking a share of, especially options, some commodities, maybe other futures, derivatives basically. I would really enjoy seeing volume on futures drop to half or more, since there is little volume on many to begin with. You think the exchanges would be having a fit. It can take years for new futures products to establish significant volume, now only to watch most of it disappear.
The markets will be just fine as long as there's millions of retail investors willing to have money taken from them by the large market forces. This is the reason why public exchanges will always be money-minting machines.
Just happened to be doing my weekly bookstore reading and noticed this comment (and Don's replies) published in this month's Tech analysis of Stocks and Commodities. That was a surprise. Would like to have seen my full title there (it was truncated to dt). Looks like dark pools are becoming a hot topic these days.
There is competition on dark pools just like on exchanges. So for example if one firm smells another is unloading a stock through dark pools, they might lower their bids. I don't know how they work, are the market makers on the real exchanges always adjusting their bid asks depending on dark pool action?