The AMC community on reddit continues to press on the idea that dark pool trading is continuing to effect the stock price of AMC. The stock market has been extremely volatile over the last few weeks and at first glance it seems the Russian-Ukraine war may be what’s causing the bearish market. While tensions between Russia and Ukraine may be a large source of the downfall of the market, investors are not dismissing other factors such as record high inflation and the manipulation of dark pools.
WHEN DID DARK POOLS START?
“Dark Pools” emerged in the 1980’s as a way for firms to make large trades without drastically impacting the market. Historically Dark Pools have been used to reduce the impact on the market because when firms are block trading millions of shares and have consistent large orders, they naturally would impact the market drastically.
The concern with Dark Pools has been growing, as Dark Pools are becoming more and more popular in the U.S. In 2017 it was estimated that 40% of all U.S stock trades were in Dark Pools, while in 2010 it was only 16%.
THE CONTROVERSY OF DARK POOLS
While dark pools are regulated by the Securities and Exchange Commission (SEC), they have been increasingly controversial because they are not available to the public and in some instances create a conflict of interest. The prices traded on dark pools may differ from the prices displayed on the public exchange. There are currently over 50 registered with the SEC. While the SEC has initiated investigations on hedge funds and chair of the SEC Gary Gensler emphasizes the importance of transparency for all investors and that they will continue to work to create maximum transparency and trust.
Dark Pool activity has been a hot topic for AMC retail investors. AMC Entertainment investors, referred to as the “ape” community notice that the volume of the AMC shares traded in dark pools is higher than average. Apes believe that the anonymous trading model and lack of transparency is benefitting the institutional investors and keeping AMC from going to the moon. Despite the skepticism, AMC retail investors continue to hold the stock, as well as increase their AMC positions and have high hopes that the SEC will work to make sure institutional investors are transparent with block trading.