More Than 50% of GME Trades Are Now Happening In Dark Pools
More than 50% of GME trades are now happening in dark pools, according to fresh data from ChartExchange.
Dark pool trading has risen under Gary Gensler’s watch, a practice which the SEC Chair has stated takes advantage of the average investor.
In 2022, The Chicago Tribune said Citadel Securities’ dark pool dominates a big part of the financial world, accounting for as much as half of U.S. stock market activity.
“This prominent dark pool is run by Chicago Billionaire Ken Griffin’s Citadel Securities and has been targeting small scale retail investors,” the outlet stated in its report.
One major concern investors have with dark pools is that trading does not reflect in the lit exchanges, such as NYSE.
Due to a practice in the industry known as payment for order flow (PFOF), brokers such as Robinhood for example, can give all of their orders to market makers such as Citadel — the behemoth that operates as a hedge fund, market maker, and has it’s own dark pool.
This means the ‘true price’ of a stock being traded through dark pools is hidden from the lit exchange since 50% (or 90% in some cases) of trades happen outside of the open markets.
The suppression of retail buying power and momentum has been an issue across many stocks, including that of GameStop (GME), and AMC Entertainment (AMC).
Data today shows that more than half of GameStop’s daily trading volume has been happening outside the lit exchange.
Dark pools are privately organized platforms, also known to be an alternative trading system accessible to only institutions.
SEC Chairman and Commissioner Gary Gensler has stated that payment for order flow is partly the reason why orders aren’t processed in the lit exchange.
He says retail orders go to wholesalers on an order-by-order competition.
Citadel’s Ken Griffin has praised PFOF stating it is beneficial for retail investors; however, in 2004 Citadel stated payment for order flow “creates conflicts of interest and should be banned”, according to an SEC file.
When Gensler was asked in 2022 by activist investor group ‘We The Investors’ if dark pools suppressed the pricing of a stock, he refrained from directly answering the question.
But I’m curious to know what you think — leave your thoughts below.
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Other GameStop News Today
GameStop now reports a whopping $4 billion cash on hand for the quarter ending July 31, 2024, breaking record from any other year.
The increase in reported cash on hand has grown significantly since 2020 when the retailer’s lowest reporting was only $500 million, per MacroTrends.
Cash on hand can be defined as cash deposits at financial institutions that can immediately be withdrawn at any time, and investments maturing in one year or less that are highly liquid and therefore regarded as cash equivalents and reported with or near cash line items.
GameStop’s cash on hand for the quarter ending July 31, 2024 was $4.204B, a 251.9% increase year-over-year.
The company recently announced that it is transforming some of its stores into “GameStop Retro” locations, focusing on older consoles and games for nostalgic players.
In an announcement on X, the company highlighted several iconic consoles, such as the Wii and Xbox 360, which have been overshadowed by newer models like the Nintendo Switch and Xbox Series X.
These retro locations will also offer a selection of classic games from popular franchises, including Pokémon, Mario Kart, Halo, and Grand Theft Auto.
GameStop has not disclosed how many stores will be designated as retro locations or whether this initiative will be a permanent change or a temporary promotion.
GameStop has implemented a retro store locator on its website to help customers find these spots.
Users can click “Find A Retro Store” and enter their ZIP code to find nearby locations under their specified radius.
The new GameStop retro stores will sell a variety of consoles including:
- Nintendo DS
- Wii
- Wii U
- Super Nintento Entertainment System
- Nintento Entertainment System
- Nintendo 64
- Nintento Gamecube
- Game Boy
- Game Boy Advance
- Play Station
- PS2 (Play Station 2)
- PS3 (Play Station 3)
- PS Vita (PlayStation Vita)
- SEGA Genesis
- SEGA Saturn
- Dreamcast
- Xbox
- Xbox 360
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Also Read: NYSE Is Now Reporting A GameStop Price Glitch
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