Exploring hidden trading practices: Dark pools and market manipulation! (Part 2)

So now the question is, why do these dark pools exist?

Imagine a secret club for big investors in the world of finance. This club allows them to trade stocks without everyone else knowing. It's like a hidden treasure chest where they can buy and sell lots of stocks without causing big ripples in the stock market.

Now, these secret clubs, known as dark pools, have some good and bad sides. The good part is that they help big investors make large trades without making stock prices go crazy. But this secrecy can lead to some problems (we have already discussed dark pools in detail in part 1 https://www.dsij.in/dsijarticledetail/articleid/32876/artmid/10163/preview/true).

Here's where regulators come in. They are like the referees of the financial world. They have noticed the concerns about these secret clubs and are trying to strike a balance. They want to let big investors use dark pools, but they also want to keep an eye on what's happening inside. They've made new rules that require the operators of these dark pools to be more transparent and play by fair rules.

Dark pools are also surfing on this new wave of technology an AI/ML. They use fancy computer programs, algorithms and artificial intelligence to make their trading even better. Regulators and stock exchanges are working together to make sure these clubs stay innovative but don't break any rules.

Dark pools are somewhat like hidden gems in the stock market. They have their upsides and downsides and as the stock market evolves, we need to find the right regulations for them. If dark pools are used properly they can help maintaining stability in the market and reduce noise.