1) most institutional clients don't necessarily want to trade in a dark pool, their orders are just routed there by the broker's smart order routers. You would be very surprised how many huge funds don't do post trade analysis.
2) the dark pool operators make money from the HFT's not in terms of the commission, but in terms of collocating fees, market data fees, and the right to be one of only a few HFTs allowed in the dark pool via collocating, ie exclusivity.
The boat loads of money was maybe an akward of stating it. To match a trade you need people on both sides of the trade. The HFTs were the missing piece the other side of the trade. WIthout them no trades, hence no money. With them, you trade more... alot more, which leads to the boat load of money that starts following when the HFTs come in.
I may have a biased view as I'm on the buy side but not on the HFT end of things:)
1) most institutional clients don't necessarily want to trade in a dark pool, their orders are just routed there by the broker's smart order routers. You would be very surprised how many huge funds don't do post trade analysis.
2) the dark pool operators make money from the HFT's not in terms of the commission, but in terms of collocating fees, market data fees, and the right to be one of only a few HFTs allowed in the dark pool via collocating, ie exclusivity.
The boat loads of money was maybe an akward of stating it. To match a trade you need people on both sides of the trade. The HFTs were the missing piece the other side of the trade. WIthout them no trades, hence no money. With them, you trade more... alot more, which leads to the boat load of money that starts following when the HFTs come in.
I may have a biased view as I'm on the buy side but not on the HFT end of things:)