The [tag]London Stock Exchange[/tag] (LSE) and [tag]Lehman Brothers[/tag] have formed a partnership to create a dark pool of liquidity for anonyomous trading of stocks across Europe, to be called Baikal, according to the IHT.
“[tag]Dark liquidity pools[/tag] are [tag]off-market trading[/tag] networks where large orders can be executed anonymously, without divulging prices to public exchanges. Off-market trading has always existed in the form of over-the-counter transactions, but the technology now exists to bring investors together electronically in anonymity. Dark liquidity in European equities is growing rapidly, according to the LSE, and currently accounts for around €12 billion, or nearly $19 billion, in daily trading value.
On traditional [tag]exchanges[/tag], buying a large block of shares typically causes the market price of a stock to rise, while selling a large block causes it to fall. Institutional investors, like hedge funds, have been seeking new ways to cut execution costs, especially as they increasingly use [tag]algorithmic trading[/tag], [tag]slicing orders[/tag] into small parts and trading rapidly according to computer programs.”