Katherine Doherty of Bloomberg recently wrote a wonderful and yet frightening article titled, "Wall Street Enters Darker Age with Most Stock Trading Hidden" (1)

Here are the first few paragraphs of the article……. "Here's a surprising new fact about the world's largest and most-liquid public equity market: Most of the activity on it isn't public anymore.

For the first time on record, the majority of all trading in US stocks is now consistently occurring outside the country's exchanges, according to data compiled by Bloomberg.

This off-exchange activity — which happens internally at major firms or on alternative platforms known as dark pools — is on course to account for a record 51.8% of traded volume in January. Barring an unexpected dip, it will be the fifth monthly record in a row, and the third month running that hidden trades make up more than half of all volume."

My firm, LCM Capital Management, thinks this should scare anyone who buys and sells stocks, ETFs, or other securities on our exchanges and believes that they are getting the best price. I know for a fact that the "dark-web" is not a good place to be, so I cannot imagine trading in "dark pools" is good for us either, unless of course you are a large institution.

Joe Saluzzi of Themis Trading. said "The bigger institutions seem to have a better experience where they can command more value." Hmmm, I know myself and our clients would sure like a better experience and more value when we are buying or selling stocks, how about you?

We are a federally Registered Investment Advisor (RIA) regulated by the Securities and Exchange Commission (SEC), which is tasked with protecting investors – and to their credit, they've made efforts when it comes to the ATS. However, according to the article some of their proposals have been stymied with only a few watered-down ones passing.  This leads us to wonder if the game is rigged if our regulators can't seem to break-in.

The Head of Strategic Operations and Public Policy at NASDAQ, Chuck Mack, says, "the worry is that the move toward off-exchange could ultimately make pricing less efficient and drive-up costs for investors and issuers." I feel comfortable telling Chuck, remove the word "could" because it "will," and once again, be at the expense of the little guy.

If you have read any of our previous blogs, you know LCM Capital Management despises these firms and big institutions and why trading the market is a fool's game. We believe the system is rigged and Ms. Doherty's article is telling you as much.

So, what's an investor to do?

There is a better way!