contained in Goldman's* presentation to the SEC last month.
Reminds me of what a wise blogger wrote back in July. Kudos to Eric, Tyler, and Rick as well.
Decimalization and technology has increased liquidity (which improves price discovery and reduces transaction costs) and automation (which further reduces costs). The only losers are the specialists, broker-dealers and other intermediaries who used to manipulate and free-ride much more than any flash trader.
One of the things I learned from the presentation is that dark pools must execute within the NBBO (National Best Bid and Offer), under Reg ATS. Basically, this allows reduced market impact--instead of having to swallow a steak or a bird whole, or requiring a big fork and sharp knife, dark pools are like the asian sous chefs who cut the meat up into bite sized pieces.
*Disclosures: Yes, Goldman has vested financial interests in the SEC not churning the regulations, but only because it is a market share leader with significant investments. And yes, I do use RediPlus daily, and SIGMA-X occasionally. But I have yet to participate in flash trading.
UPDATE: Mary Schapiro needs to be replaced.