Leading Money Managers Launch Own 'Dark Pool'

Jan 20 2015 | 11:30am ET

Take that flash boys—Fidelity Investments and eight other big money managing firms are forming their own trading venue to bypass Wall Street firms and high-speed traders.

Citing people familiar with the matter, the Wall Street Journal reported that the firms—which include BlackRock, Bank of New York Mellon, J.P. Morgan Chase & Co. and T. Rowe Price Group—will operate a so-called dark “dark pool” where they can trade without public scrutiny.

Fidelity holds the biggest stake in the new company, which is expected to start trading later this year.

The firms, which usually compete against each other, are united in their desire to trim trading costs and end what critics—like author Michael Lewis—consider to be the unfair advantage of high-speed traders.

Lewis’ latest book, Flash Boys, argues that HFT allows a form of front-running and is, in effect, insider-trading. The author alleges that the practice has “rigged” U.S. securities markets.

The WSJ initially reported on the project last spring, saying the new firm had the tentative name of  “Sakura”—Japanese for cherry blossom.


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