Research Seminar: Gbenga Ibikunle, University of Edinburgh

City Goes Dark: Aggregated Market Quality Implications of Dark Trading
Event Research Seminar
Event information
Date 19th October 2016
Time 1:00pm - 2:00pm
Venue ICMA Centre, Whiteknights campus
Event types:
Research Seminars

We test theoretical predictions regarding the implications of operating dark pools alongside lit venues for market quality in London ‘City’ trading venues. We find that dark trading at moderate levels enhances market transparency and reduces both trading noise and incidences of trading manipulation. Results however imply that there is a threshold of value when dark trading diminishes transparency and thus induces a deterioration in market quality. Evidence also suggests that the positive effects of dark trading could be linked to uninformed traders gravitating towards dark pools and informed traders concentrating on lit venues; this self-selection reduces information asymmetry.

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