Light pool explained

Q.Who is light pool aimed at?
A.Light Pool is aimed at long-term investors who want to post visible trade queries without falling prey to opportunistic traders that can operate on the traditional exchanges.

Q.Who can trade on Light Pool?
A.Anybody will be able to trade on Light Pool, but every client will be scored by a formula and can be forced to leave. This would happen if a statistical analysis of a client’s trades showed that markets were consistently moving in its favour in the short term after a trade.

Q.Is there anything similar available already?
A.Not specifically aimed at long-term investors. Nasdaq OMX launched a platform called PSX last October, but this prioritises large block trades, so favours high-frequency traders over those looking for a long-term investment.

Q.When will it be launched?
A.Light Pool has been beta-testing among selected clients since 20 December using just one stock – General Electric. It will be rolled out across all stocks by the end of March this year.

Q.Where else can US investors trade?
A.The US has 13 official stock exchanges, three electronic communications networks, and more than 40 dark pools. The largest, Cross Finder, is also operated by Credit Suisse.