Near as I can tell, fees will be high enough so as to make the arbitrage unprofitable.
I believe the mechanism going on here is this:
Big Traders offer to buy at $10.00 on Light Pool. Their offer sits there, and gets filled slowly over time. Then, for whatever reason the price moves, and a bunch of speed traders try to sell on INET/ARCA/BATS at $9.99 (perhaps in anticipation of the market moving down to $9.90). Due to the high fees, they don't place those orders on Light Pool. The market crosses for a little while, no trades occur, and Big Traders get the opportunity to pull their $10.00 order from light pool.
However, the article wasn't clear enough for me to be certain.
Whenever you see a stock price it is always the price where the stock last changed hands. If the stock is lightly traded then the last trade may have been for as few as 100 shares. So what is the price if you want to buy or sell 200,000 shares of that stock? I am sure it is not the last quoted price. They are setting-up a market where slower and bigger trades can take place
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I can't see how they can.
Near as I can tell, fees will be high enough so as to make the arbitrage unprofitable.
I believe the mechanism going on here is this:
Big Traders offer to buy at $10.00 on Light Pool. Their offer sits there, and gets filled slowly over time. Then, for whatever reason the price moves, and a bunch of speed traders try to sell on INET/ARCA/BATS at $9.99 (perhaps in anticipation of the market moving down to $9.90). Due to the high fees, they don't place those orders on Light Pool. The market crosses for a little while, no trades occur, and Big Traders get the opportunity to pull their $10.00 order from light pool.
However, the article wasn't clear enough for me to be certain.
Whenever you see a stock price it is always the price where the stock last changed hands. If the stock is lightly traded then the last trade may have been for as few as 100 shares. So what is the price if you want to buy or sell 200,000 shares of that stock? I am sure it is not the last quoted price. They are setting-up a market where slower and bigger trades can take place