JPMorgan Chase & Co. (NYSE:JPM) And Other Big Players Form Consortium To Operate Dark Pool

A Wall Street Journal report has revealed that JPMorgan Chase & Co. (NYSE:JPM) and other big players headed by Fidelity Investments are about to form a dark pool to place equity trades. A dark pool represents anonymous venue where the participants could buy and sell a large number of shares without being bothered by the Wall Street firms and high-speed traders.

Have analyst identified a ongoing trend in JPM? 

Big Presence

The named members of the dark pool are BlackRock, Inc.(NYSE:BLK), Bank of New York Mellon Corp (NYSE:BK), JPMorgan Chase & Co. (NYSE:JPM) and T. Rowe Price Group Inc (NASDAQ:TROW). The idea spearheaded by Fidelity is an effort to create a private trading venue, which will benefit mutual fund shareholders. The group, to be run on little or no profit, will allow every member to hold a seat on the board of directors. Further, it is estimated that the said project will be rolled out within few days while the trading will begin only by late 2015.

Existing Problems

Working on such project is quite unconventional for these companies, which are often regarded as rivals. However, the high costs and disadvantages accruing on account of the presence of high-speed traders has brought these big players together. Thus, creating a dark pool will help subside these problems. Despite the presence of some of the big firms, some companies of repute have decided to stay off. This includes Vanguard group, which has not yet expressed its interest to join the dark pool.

One reason for holding back such interest could be the way dark pools had been subject to tough regulatory scrutiny as they are perceived as too opaque. In June, the New York attorney general had filed litigation against Barclays PLC (ADR) (NYSE:BCS) for having mislead its clients in the dark pool. There were other cases filed in various courts that directed companies involved in the dark pool to pay fine and charges.

About the Author

Coper graduated from the University of Chicagi with majors in political science and journalism.

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