EU Rules Want Light. Traders Like Dark, Periodically

Europe’s push for more transparency in stock trading, which ushered in new limits on so-called dark pools, has led to a surge in what are known as periodic auctions. They’re advertised as a more transparent way of trading stocks, but they share some of the characteristics of dark pools, like the anonymity prized by investors buying or selling big blocks of stock who worry that too much sunshine costs them too much.

Simply put, they are services that trade shares in batches. Normal stock trading happens continuously when a market is opening, with individual trades being executed whenever they are matched up. Periodic-auction services pause and restart trading throughout the day. Fund managers submit orders just as they do to a stock exchange, but their orders will not be matched until the end of an auction. But don’t look for bidders holding up paddles or other things we associate with auctions. From start to "Going, going, gone!" can take 100 milliseconds.