During an international IR conference in Sofia, July 2009, Michael McGough , Vice President, Marketing and Membership Development at NIRI discussed the issue of lost linkage between listing and trading in the US. It is estimated that dark pools as Cross Finder and Sigma X account for up to 15 percent of US equities trading (Q3 2007). Dark pools’ expansive popularity in the US has limited the transparency securities market to the extent that SEC wants to toughen the trading limit from 5 percent to 0.25 percent.
The “dark pool”-debate reached Europe just a couple of months ago. E24 report that in November 2009, one out of three trades (27 %) were done within trading systems as Chi-X, Turquoise and Burgundy. Swedish Burgundy is estimated to trade 25 percent of the Swedish securities in summer 2010.
To track down who is trading your stock in a dark pool is a mission impossible. The best advice is to be aware of how different types of trades affect the volatility of your stock.
Active use of targeting procedures and a proactive strategy for shareholder composition are other valuable IR tools for understanding and explaining volatility.
Keep on eye on the dark pools, but let the long-term shareholders and investors being your top priority. Knowing your shareholder base is the foundation for shaping a transparent and professional IR program.
Regular use of shareholder ID, targeting and perception studies give you critical market intelligence information i.e. a broader understanding of financial drivers and identifying weaknesses in your investment case. Facts that hopefully help you get a fairer valuation of your company.