Wall Street Journal: Wall Street Fears Nasdaq Would Expose Trading Secrets

By Jen Fagenson

November 9, 2017

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WSJ’s Alexander Osipovich covers the dispute over Nasdaq’s plan to launch an options-data service called the “Intellicator Analytics Tool”, which critics say that if approved by the SEC, the service could enable sophisticated algorithmic traders to exploit investors. Dash CEO, Peter Maragos, commented on the story.

That could harm pension funds and other institutional investors, for whom it is critical to get big trades done quietly, said Peter Maragos, chief executive of Dash Financial Technologies, an equities and options brokerage.

When such big investors want to buy or sell large quantities of options, their brokers will often break the order into chunks and execute them throughout the day. The idea is to avoid tipping off the market about the large investor’s intentions.

But if the Intellicator reveals a small order was initiated by a big investor, others could infer that the investor is about to buy or sell many options, potentially affecting the price of the underlying stock. An algo trader could quickly buy or sell that stock, resulting in a worse price for the investor on the options, Mr. Maragos said.

“We don’t see how this benefits investors in any way,” he said.

To read the full article, click here.