What to make of dark pools' fast growth

There has been lots of activity in the dark pool industry as of late--from Lehman Brothers' announcement that it will align with the LSE to create a new dark pool, to news of Liquidnet's planned initial public offering to the NYSE's upcoming launch of a European system. No one would be surprised if such liquidity pools continue to carve out market share. The Tabb Group says dark pools now account for 12 percent of U.S. volume. That will only rise. To many, dark pools represent an elegant electronic solution to the needs of institutional clients. To others, they represent a dangerous source of fragmentation that just might undermine the historical movement toward a best-price determined by the entire market. This is a PR issue that the industry cannot ignore. A commentary in the Financial Times  wonders if price discovery has been undermined and ponders the need for regulation.  

For more:
- here's the Financial Times commentary

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