The latest dark pool and off exchange data shows that more than 50% of AMC stock is currently trading off exchange this month already.
According to Chart Exchange, AMC Entertainment’s (NYSE:AMC) trading volume in off exchanges is currently between 50% and 59%.
On Tuesday, off exchange volume peaked at 59.47%.
Wednesday saw 56% volume happening outside the lit exchange.
At the time of this publication, AMC stock is trading at $8.21 post reverse split.
Is off exchange trading suppressing AMC’s true demand from retail investors?
The possibility is rather likely.
Gary Gensler announced last year that 90%-95% of retail orders do not go through the lit exchange.
We The Investors asked the SEC Chairman if dark pools suppressed the price of stock and whether retail investors could influence the price of a stock if majority of orders traded in the lit exchange.
While there was no direct answer to the suppression of price, the Chairman says that with so much trading happening off-exchange, he doesn’t think it’s a leveled playing field as “dark pools give institutions an unfair advantage.”
“Retail investors as individuals don’t have the power to move the markets, but retail orders combined could have significant price impact.”
AMC stock is currently down more than -76% this year-to-date and down more than -88% in the past year.
Also Read: AMC Will Now Sell Shares to Raise Money
What Are Dark Pools?
Dark pools are privately organized platforms, also known to be an alternative trading system accessible to only institutions.
Dark pool trading, or off-exchange trading has risen substantially since Gary Gensler was appointed Chair of the Securities and Exchange Commission (SEC) in April of 2021 by President Joe Biden.
But SEC Chairman and Commissioner Gary Gensler says payment for order flow is partly the reason why orders aren’t processed on 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’s good 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.
PFOF allows market makers to process retails orders in the ‘dark markets’, or dark pools, per SEC Chairman Gary Gensler.
See, the thing is that the SEC actually has the power to ban dark pool trading.
Why dark pool trading has risen since Gary Gensler took office is something the retail community is trying to comprehend.
When more than 50% of a stock’s trading volume goes to dark pools, the demand is cut by 50%, often times more depending on the trading day.
Half (or more) of retail’s money is not being reflected per the real demand of a security when trading has been rerouted to dark pools.
In other words, dark pools seem to allow institutions to suppress shares from rising based on the true demand of a security.
Then of course there are other means of driving shares down such as through spoofing, naked short selling, and short and distort campaigns.
But I’d love to hear your thoughts on this – leave a comment down below.
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