Goldman Sachs is not quite ready to get out of the pool.
Harvey Schwartz, the chief financial officer of Goldman Sachs, told analysts during a conference call to discuss the bank’s first-quarter earnings on Thursday that he had “no strategic plans” to close the bank’s dark pool trading business known as Sigma X.
Dark pools are stock trading systems that allow buyers and sellers to remain anonymous outside of established exchanges like the New York Stock Exchange. The practice began drawing increased scrutiny from regulators as concerns grew that such practices could obscure the true value of stocks, and whether regulation has been able to keep up with new technology and other market conditions.
The recent book “Flash Boys” by Michael Lewis drew even more attention to dark pools by questioning whether high-speed traders were gaining unfair market advantages.
Asked about what kinds of concerns he had heard from clients regarding Sigma X, Mr. Schwartz said he was unaware of any explicit concerns.
At one point before the financial crisis hit, Goldman operated the largest broker-run dark pool, averaging 140 million shares a day. But revenue from the unit has declined amid increased competition from rival firms.
About 36.8 percent of all stock trading now takes place outside of public exchanges, according to Rosenblatt Securities.
That flies in the face of regulators’ attempts to bring more transparency to the financial industry in the wake of the financial crisis. Like public exchanges, dark pools allow investors to connect with buyers and sellers, but they are subject to less strict regulatory requirements.
“They have to weigh the benefits of generating revenue and earnings from their dark pool business versus their traditional customer business,” said Gerard Cassidy, the head of United States bank strategy at RBC Capital Markets.