Lots of innuendo trying to scare us about the notion that two parties might directly negotiate a transaction between themselves. The horror! Won't someone think of the middlemen and high frequency frontrunners! People should be buying and selling stock at prices they believe are supported by the actual performance of the company. Concerns about "liquidity" generally seem to be really about protecting the ability of some people to manipulate the market. When was the last time Citadel had a losing quarter? Large privately negotiated sales represent a huge risk to HFT firms that provide "liquidity" by sending your order through a slow pipe, while going out of frontrunning it on a fast pipe. They might actually get caught of the losing side of a trade! The horror!
This is all about price transparency -- which should be required of all markets in publicly traded financial instruments. Let's take a look at an example of the behavior this drives which is detrimental to traders. Let's say a large institution wants to purchase stock ABC at $60 but they don't want their large purchase to influence the market. The stock is currently trading at $57 Instead of a public order that is visible to traders they put out their order via a "private room" to a brokerage firm to purchase the stock. The brokerage firm (which specializes in the market) acquires lots at the stock at $57 and then acquires more lots as prices rise slowly above $57 due to their buying pressure. They turn around an sell all of this stock to the Institution for $60 pocketing a nice profit. All without ECN prints, market depth visibility, etc. Basically there is no disclosure to the market that the stock actually changed ownership at $60 only at lower prices (thus a lack of market pricing transparency). If the order was placed publicly by the institution via the brokerage then the price of the stock would have popped up to $60 and traders would have made the profit rather than a large brokerage. The above is just one example of how this lack of market pricing transparency caused by "private rooms" is detrimental to traders. There are plenty of others as well. Even scenarios where the public market is trading at prices way off from the exchanges going on in "private rooms" by professionals even if there is no crossover in the shares being exchanged. The lack of transparent price discovery undermines the proper valuation of the traded financial instrument.
By "price transparency" you mean: having information about other people's financial affairs so you can trade on it. By which you mean: it makes it more risky for people who want to trade a stock with no real concern for the business the company is actually involved in and who hold some middleman or bookie type position in market. So the firm who actually wants to take a stake in the company should have to pay a higher price due to "traders" who have no actual long term interest. What a terrible loss! How will society cope? Isn't it interesting how your response also presupposes that these traders will be able to act on and outrun the price effect of the order if it was placed on the open market? Sure the big firm put their order in first but the "traders" should be able to act and obtain an interest that allows them to profit off that order.
It does not matter if the person in the market is a trader or long term investor. All publicly traded financial instruments should have full price transparency for a properly operating market. This is the very definition of why a financial instrument is considered public rather than private. This is coupled with the expectation that all transactions of a stock should be publicly disclosed. For example, if a transaction occurred off-market between two parties for $60 for a stock but it was publicly printed (disclosed) then at least other investors trading it at $57 would know that a large block was exchanged for $60 and therefore someone institutional thought it was worth more -- and likely would be reflected in the pricing information on the exchange. However these "private room" exchanges do not provide public pricing or volume information about the sale of the publicly traded stock. How would investors know that another party thought it was worth more (or less) than what it was trading for in the market. We are now at the point where more than 50% of the volume is traded in private rooms. Tell us what will happen when over 99% of a stock's volume is private and under 1% is public. Do you think that we even have an efficient operating market for the stock?
Carlos Cabana, head of equity sales and trading at CastleOak, dubs the room a “diversity pool,” because the participants are all minority-operated brokerage firms. While in this instance CastleOak doesn’t know specifically who is on the other side of every trade, it knows it will be one of about 10 counterparties who meet certain eligibility criteria related to ownership and investment goals. Is this for real? Cracking me up! Sounds very woke and possibly racist..“diversity pool” that are minority-operated and branded, Darker then a dark pool. Has to be someone trolling.
No actually it's not. https://www.investopedia.com/ask/answers/difference-between-publicly-and-privately-held-companies/ Public most certainly does not mean every stock transaction must happen through an exchange. Public means that ownership is open to the general public, not that everyone who acquires or disposes of that stock is obligated to provide you with information. Those "investors" could actually take a position in the stock and see what price people are willing to buy or sell at. You know, like "investors" would actually be interested in doing. Of course investors would actually do at least minimal research on the company itself to determine if the company's operations justify the price. I find that generally people such as yourself define "efficient" as: a bunch of extra middle men chiseling off cents between the actual long term buyer and seller. They provide fake "liquidity" by buying and selling shares that they have no intention of actually owning for a significant period of the time, but manage to take away some portion of the income that would otherwise be earned by a long term investor. I could do without that "efficiency".
Since everyone else is having fun with AI in these forums recently -- let's see what AI has to say about your assertions: ----------------------- Price transparency is a fundamental principle for the effective operation of a public stock market. It ensures that all market participants—whether short-term traders, long-term investors, or institutional buyers—operate on a level playing field. Without price transparency, the true value of a stock is obscured, leading to inefficiencies, market manipulation, and a loss of confidence in the fairness of the system. Below, I will detail why price transparency is vital for all investors, refute misconceptions about its necessity, and provide supporting evidence from reputable sources. The Definition and Importance of Price Transparency Price transparency in a stock market refers to the ability of all participants to access real-time information about the price and volume of securities being traded. This includes the visibility of buy and sell orders, executed trade prices, and overall market depth. This transparency is crucial for multiple reasons: Efficient Price Discovery: A well-functioning stock market relies on accurate price discovery, where the current stock price reflects all known information about a company. When transactions are hidden in private markets, it creates an asymmetry where some participants have access to better data than others. This results in distorted stock prices and potential misallocation of capital. Market Fairness and Investor Confidence: Investors—both retail and institutional—must trust that the market operates fairly. When significant portions of trades are hidden in dark pools and private exchanges, public investors are left without full knowledge of supply and demand dynamics, which can undermine confidence in market integrity. Liquidity and Market Stability: While some argue that private transactions increase liquidity, the reality is that they do so at the expense of the broader market. When large trades occur outside public exchanges, the visible liquidity decreases, which can lead to increased volatility and price manipulation. Reducing Market Manipulation and Insider Advantages: Without transparency, there is an increased risk of market manipulation, including front-running, where certain participants exploit order flow information to their advantage. Transparency ensures that no one entity has an undue advantage over others. Addressing Common Misconceptions "Public Does Not Mean Every Transaction Must Be Visible" While it is true that "publicly traded" means that ownership is available to the general public, this does not negate the need for transaction transparency. A public stock market exists precisely so that investors can assess market conditions in real-time. According to the Securities and Exchange Commission (SEC), transparency in financial markets is a cornerstone of investor protection and market efficiency (SEC Transparency Initiatives). Moreover, without transparency, large institutional investors can gain unfair advantages over retail and smaller institutional traders, resulting in market inefficiencies rather than fairness. The presence of active traders ensures that price formation remains dynamic and reflective of available information. "Investors Can Simply Buy and Sell Based on Their Own Research" While fundamental analysis is a critical component of investment, real-time market data is equally important. Investors do not operate in a vacuum; they require up-to-date information to make informed decisions. When large trades happen privately, investors are left guessing about true market conditions. This can lead to market mispricing and inefficient capital allocation. The Consequences of Lack of Transparency The rise of dark pools and private transactions has led to a situation where over 50% of trades occur outside of public exchanges (Yahoo Finance Article on Dark Pools). This has several negative consequences: Price Discrepancies: Without full transparency, market prices can diverge significantly from actual trading prices, making it harder for investors to accurately assess value. Reduced Market Participation: If investors feel the market is unfair or manipulated, they may withdraw participation, leading to reduced overall liquidity and increased volatility. Potential for Systemic Risk: A lack of transparent pricing can lead to market bubbles or crashes, as investors react to incomplete or misleading price signals. The Need for Regulatory Reform Given the impact of dark pools and private transactions on market fairness and efficiency, increased regulatory oversight is necessary. Some proposed reforms include: Mandatory Trade Reporting: All stock trades, including private transactions, should be reported to a central database accessible to all investors. Limitations on Dark Pool Activity: Exchanges should be required to match off-exchange transactions to ensure transparency and fair pricing. Greater Oversight of Market-Making Practices: Firms engaged in market-making should be subject to stricter reporting requirements to prevent price manipulation. The SEC has already started implementing some reforms, such as the Market Data Infrastructure Rule, aimed at increasing transparency in market data dissemination (SEC Market Structure Initiatives). However, further steps are needed to address the growing influence of opaque private trading venues. Conclusion Price transparency is not just a concern for traders—it is essential for all market participants, including long-term investors, to ensure fair price discovery, market efficiency, and investor confidence. The rise of dark pools and off-exchange trading has created an environment where price signals are increasingly unreliable, posing risks to market stability. Regulatory intervention is necessary to preserve the integrity of public markets and ensure that all investors—regardless of size—have access to the same pricing information. The argument that traders are mere middlemen who add no value ignores the critical role of liquidity providers in maintaining market efficiency. Rather than accepting the growing opacity of stock markets, we should advocate for a financial system that adheres to the fundamental principles of fairness, transparency, and efficiency. Without these, the very foundation of a public stock market is at risk.
AI gibberish. Although even it knows that you don't seem to understand what public/private means. The best thing for "fairness" is to not give a bunch of self serving insiders in a private club dictatorial control where the only way to trade stock is through them. The front running is happening inside the system. Non value added players are front running the actual buyers and dishonest people are claiming that because the stock was sold twice instead of once that's "liquidity" and therefore good. This is like listening to a realtor whine that all sales should go through their system in order to ensure "transparency" and "fairness" Anyone else remember when they stepped in to protect Citadel from losing money during the GameStop debacle? Or their plans to force DIE requirements on your portfolio? It's sad watching people call for their own freedom to be taken away.