Yeah. I don't think it's surprising either, in fact when I was first writing the post I assumed HFT volume was closer to 95% of trade volume but I couldn't find any public numbers above 70%.
I think that dark pools are where the next crash will come from, but I'm by no means a financial wizard. The way I perceive it, dark pools and other nearly-invisible investment exchanges are scary in that the ramifications of dark pool trading can spill over into the light world (as it were) with dire consequences.
We'll see, I'm also thinking that the next crash could just as easily be caused by a rogue algorithm as a rogue trader.
Dark pools sound more ominous than they often really are. Most of the time, it's just trades that are done directly between two instituions (often via a broker-dealer like BGC or ICAP) rather than via an exchange.
Maybe you actually know a lot about dark pools, but by expressing fear without expressing knowledge, you give the impression that you're mostly afraid because the name "dark pool" sounds like some kind of unregulated secret exchange run out of a meat locker by the Russian mafia.
I think Kid Dynamite (a retired trader, non-HFT) has some pretty reasonable articles about dark pools:
Disclaimer: my employer helps mutual funds, pension funds, universities, etc. place large orders on the market, using a variety of techniques (including dark pools) to try and smooth out the market impact of these big trades and minimize the the amount clients lose to market participants who are trying to anticipate their short-term trading behavior.
Yes, I am aware of what dark pools are, and I'm not trying to imply fear. It's irrational to fear things you can't change, and it's unreasonable for me to deplore someone else allocating their money in an interesting fashion. I don't mean Dark pools are inherently bad because they're dark. These Dark pools expose society to unmanaged risk because of the implicit guarantees of support from the general population.
It's not so much evil as it is secret, and secrets with public shares are interesting secrets indeed.
As I said, I don't live in fear of Dark pools or any financial instrument, but it's important to understand that there is a significant difference between the normal sale and purchase of securities and the activity which happens in Dark pools. Otherwise there would be no need to draw a distinction.
I think that dark pools are where the next crash will come from, but I'm by no means a financial wizard. The way I perceive it, dark pools and other nearly-invisible investment exchanges are scary in that the ramifications of dark pool trading can spill over into the light world (as it were) with dire consequences.
We'll see, I'm also thinking that the next crash could just as easily be caused by a rogue algorithm as a rogue trader.