Brokers to share access to orders on "dark pools"

BY DONNA KARDOS

Goldman Sachs Group Inc., Morgan Stanley and UBS AG announced a series of deals that will give clients access to a broader range of secret stock-market bids and offers as they seek to tackle the growing fragmentation amid so-called dark pools.

The moves come as dark pools, the electronic-trading networks that match buyers and sellers anonymously, are booming in popularity.

Big institutional investors see dark pools as a way to trade blocks of stock without triggering swings in the share price, as can happen on traditional stock markets like the New York Stock Exchange and Nasdaq Stock Market.

The deals announced Tuesday allow algorithmic-trading orders of each company to interact with the liquidity found in three of the U.S's largest broker- dealer-operated dark pools: Goldman Sachs's SIGMA X, Morgan Stanley's MS POOL and UBS's PIN ATS. Algorithmic-trading orders are entered in a computer program that can determine the sequence of timing, price, or even the final quantity of the order.

Forty-two such U.S. trading networks compete for orders, up from seven about five years ago, according to Tabb Group, of Westborough, Massachusetts. Large brokerage firms, trading boutiques and stock exchanges have designed systems where institutional investors cross orders outside of public exchanges.

"We're confident that providing our respective clients access to each other's liquidity will achieve even better crossing results for our clients in an increasingly fragmented market," said Greg Tusar, managing director of electronic trading for Goldman.