Goldman Sachs Prefers to Swim in Dark Pools

In a memo to the S.E.C., Goldman Sachs has asked the regulator not to shine too much light into those electronic “dark pools,” where shadowy traders can lurk around without having their orders broadcast to the public.

The 55-page memo pits Goldman against a number of powerful legislators, including Senator Charles Schumer, who last week called for the S.E.C. to regulate the pools.

There are about 40 of these opaque exchanges in existence–Goldman’s is called “Sigma X”–and together they account for an estimated 10 to 15 percent of all trading in the United States. But they’re particularly popular with serious traders, says Bloomberg :

High-frequency traders, whose computer programs buy and sell shares up to 1,000 times faster than the blink of an eye, account for about 46 percent of daily volume.  

The desire for darkness is, perhaps, fitting for a company famously referred to as a “great vampire squid wrapped around the face of humanity,” by Matt Taibbi in Rolling Stone. The vampire squid, which lives in the dark ocean depths, survives by emitting a diffuse bluish light that obscures its silhouette from predators lurking below–a strategy called “counterillumination.”

Goldman Sachs Prefers to Swim in Dark Pools