Dark pools were meant for anonymous trading of very large blocks but the size of those trades continue to diminish.
According to the latest TABB Equity Report, the independent research firm found that the average daily volume for 2015 was 6.9 billion shares, the highest ADV for the year since 2011.
In January 2016, industry volume continued to rise, with 9.3 billion shares traded a day, a significant increase compared to January 2015 (7.3b) and January 2014 (6.9b), according to the reports authors Valerie Bogard and Sayena Mostowfi.
The Tabb Group report also found that industry trade size hit a new record low. In Jan-2016, industry trade size hit a 10-year low with an average of 202 shares, surpassing the previous all-time low, in October 2015, of 203 shares, according to a Tabb Group press statement.
UBS became the new ATS volume leader for Q4 2015 by executing 153 million shares per day. The Swiss investment firm doubled its industry market share since Q1 2013, from 1.1 percent to 2.2 percent in Q4 2015.
Now all of what Tabb Group found was bad news. For example, retail wholesalers reported gains of 2.1 percent of dark volume year over year. In Q4 2015, the industry volume consisted of 57.1 percent Lit Volume (+0.4 percent YoY) and 42.9 percent dark volume. The Dark Volume breakdown in Q4 2015 was 40.6 percent Retail Wholesaler, 32.0 percent Dark ATSs, 20.4 percent Hidden Exchange and 7.0 percent SDP/Other. YoY Dark Volume was down by 0.4 percent (43.3 percent in Q4 2014), although Retail Wholesalers percentage of Dark Volume increased 2.1 percent YoY, reads the report summary.
Also, Dark ATS and retail wholesaler concentration saw some increases. In Q4-2015 the top 15 out of 37 Dark ATSs made up 90 percent of total Dark ATS volume, up 3.1 percent YoY. During the same time period, the top 3 out of 8 Retail Wholesalers accounted for 71.5 percent of total Retail Wholesaler volume, up 7.8 percent YoY, according to the summary.
Finally, the Tabb Report found that Lit ATS Market Share Increased 36 percent from Q2-2015. This was thanks to upstate stock exchange IEX, according to Tabb Group. Lit ATS market share has increased to 1.7 percent in Q4-2015 compared to 1.2 percent in Q2-2015, as a result of increased volume to IEX. IEX has increased its industry market share by 40 percent since Q2-2015, when it became a Lit ATS, from 1.1 percent to 1.6 percent, reads the report summary.
To read the entire report, download it from Tabb Group.