In lower Manhattan, the New York Stock Exchange’s bell rings at 4 p.m. ET each trading day, signaling a giant auction that determines the closing prices for thousands of stocks. Seconds later, across town, Goldman Sachs Group Inc.’s trading systems pair up buyers and sellers on tens of millions of shares—using the price published by the NYSE but avoiding the Big Board entirely. Goldman...
Some of Wall Street's biggest banks are executing end-of-day equity trades off-exchange, matching orders in-house and bypassing closing auctions. The number of closing-price trades executed with “guaranteed close” by broker-dealers like Goldman Sachs increased from 16% to 32% between 2015 and 2017, according to Virtu. The move, prompted by exchange operators increasing fees, has gained popularity as index trackers created a surge in end-of-day volumes, but raises questions over transparency and closing price formation. 2004, closing auctions in S&P 500 stocks accounted for 8% of total volumes, a near four-fold increase since Last year, according to Credit Suisse.