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Book Review: 'Dark Pools' By Scott Patterson

Jul. 14, 2012 12:15 PM ET4 Comments
Hazel Henderson profile picture
Hazel Henderson

Dark Pools is a page-turning, fascinating account of how computerized algorithmic high-frequency trading (HFT) and electronic platforms evolved, took over financial markets and turned the NYSE floor into a mere "puppet-show for TV." Author Scott Patterson, a reporter for the Wall Street Journal, is a consummate observer. Dark Pools is a follow-up to his New York Times bestselling, award-winning The Quants (2010). His account of what's transforming capital markets cross-references Broken Markets by Sal Arnuk and Joseph Saluzzi, which I reviewed for Seeking Alpha.com June 30, 2012.

While Arnuk and Saluzzi, as co-founders of Themis Trading, LLC, write as deeply-concerned market participants, author Patterson is a quintessential observer, also deeply-concerned as a knowledgeable researcher in the field of artificial intelligence and an investigative reporter. While Broken Markets reads like its authors' many informative letters to the SEC and testimony before expert groups, Patterson's Dark Pools explores the colorful inner workings through a cast of improbable characters: the traders, programming geniuses, eccentric electronic market-makers, aggressive "algo-warriors," high-rollers and hedge fund quants who have taken over Wall Street, London, Singapore, Tokyo, Mumbai, Sao Paulo and Shanghai. Their fiber-optic cables circle the Earth, linking all financial markets at ever-higher speeds in the global arms race of the Algo Wars. These cables are now being superseded by even-faster microwave stations relaying HFT orders and trades 3 milliseconds faster than the fastest cables.

As a worried retail investor, I have tracked these changes second-hand, in my editorials, including "Global Finance Lost in Cyberspace" (www.ethicalmarkets.com). Patterson reports that the Tokyo Stock Exchange's Arrowhead HFT platform launched in 2010 now makes up half its volume. The Singapore Exchange (SGX) launched its Reach platform in 2011, billed as the fastest matching engine, with order speeds below 90 micro-seconds, and aggressively courting all the high-speed traders now flocking to Asia. India's National Stock Exchange (NSE) back in

This article was written by

Hazel Henderson profile picture
Hazel Henderson D.Sc.Hon., FRSA, is the founder of Ethical Markets Media, Certified B Corporation and producer of its TV series. She is a world-renowned futurist, evolutionary economist, a worldwide syndicated columnist, consultant on sustainable development, and author of The Axiom and Nautilus award-winning book Ethical Markets: Growing the Green Economy (2006) and eight other books. Her editorials appear in Wall Street International Magazine and many other media partners, including Other News, and her book reviews appear on SeekingAlpha.com. Her articles have appeared in over 250 journals, including (in the USA) Harvard Business Review, New York Times, Christian Science Monitor; and Challenge, Mainichi (Japan), El Diario (Venezuela), World Economic Herald (China), LeMonde Diplomatique (France) and Australian Financial Review. Since becoming a full-time media executive in 2004, Hazel has stepped down from many of her board memberships, including Calvert Social Investment Fund (1982-2005), the Social Investment Forum and the Social Venture Network. She has been Regent's Lecturer at the University of California-Santa Barbara, Horace Albright Chair in Conservation at the University of California-Berkeley, and advised the U.S. Office of Technology Assessment, the National Academy of Engineering, and the National Science Foundation from 1974 to 1980. She remains on the International Council of the Instituto Ethos de Empresas e Responsabilidade Social, Sao Paulo, Brasil; serves on the Program Council of FORUM 2000, Prague, Czechoslovakia, founded by the late President Vaclav Havel; is a World Business Academy Fellow; an active member of the National Press Club (Washington DC), and a member of the Association for Evolutionary Economics. She is an Honorary Member of the Club of Rome. She shared the 1996 Global Citizen Award with Nobelist A. Perez Esquivel of Argentina. In 2007, she was elected a Fellow to Britain’s Royal Society of Arts, founded in 1754. She leads the Transforming Finance initiative, created the Green Transition Scoreboard®, co-developed with Calvert the GDP alternative renamed the Ethical Markets Quality of Life Indicators, co-organized the Beyond GDP conference for the European Commission, and funded three Beyond GDP surveys, finding strong support worldwide for ESG metrics in national accounting. In 2010, 2012, 2013, and 2014, she was honored as a "Top 100 Thought Leader in Trustworthy Business Behavior" by Trust Across America. In 2012, she was honored with the Reuters Award for Outstanding Contribution to Development of ESG & Investing at TBLI Europe. In 2013, she was inducted into the International Society of Sustainability Professionals Hall of Fame.  Her 2014 monograph, Mapping the Global Transition to the Solar Age, published by ICAEW and Tomorrow’s Company, UK, is available for free download from www.ethicalmarkets.com.

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