Courtesy of Pam Martens
Futures on the Dow Jones Industrial Average are up early this morning by more than 200 points. But the 10-year U.S. Treasury has also had a big rally, which dropped its yield overnight to just below 2 percent. The 10-year Note yield below 2 percent suggests a serious slowdown in the U.S. economy. That’s not something corporate stocks should be cheering about. The continuing aberrations in the U.S. stock market suggest a malfunctioning stock market structure and the first place to look is Dark Pools, which are unregulated stock exchanges run by the same mega Wall Street banks that blew up the U.S. financial system in 2008 and received the largest taxpayer bailout in U.S. history.
Apparently unbeknown to the Securities and Exchange Commission (SEC), when Goldman Sachs changed the name of its big Dark Pool that trades here in the United States from Sigma X to Sigma X2, it wasn’t simply to suggest a modernized version of its old Dark Pool. It was to differentiate that Sigma X2 is Goldman’s Dark Pool brand in the United States and Sigma X is its Dark Pool brand on three other continents – Europe, Asia, and Australia. From our queries to the SEC, it also appears that the SEC doesn’t have a handle on the sprawling Dark Pool empire that exists at Goldman Sachs.
According to publicly available disclosure documents, Goldman Sachs is running Dark Pools in Europe, Japan, Hong Kong and Australia under the Sigma X brand. It is also operating a Futures SIGMA X in Japan. We could not locate any U.S.-based public disclosures on the futures operations of Sigma X in Japan.
According to a “Frequently Asked Questions” document from Goldman Sachs, under the question “Is SIGMA X a dark pool that only matches trades anonymously, without information leakage? Or will information regarding my orders be conveyed to potential liquidity providers,” Goldman says this: “The matching process for SIGMA X is completely internal, and SIGMA X will not disseminate any pre-trade information to internal trading desks or external counterparties. Executed trades are publicly reported where required by applicable rules.”
In other words, this is an unlit market where pre-trade prices are not available to the public and trades are only reported after they have occurred in darkness, if they are reported at all.
According to Goldman’s disclosures, its European Dark Pool, known as Sigma X MTF (Multilateral Trading Facility) “is operated by Goldman Sachs International Bank as an independent business with its own separate management structure.”
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