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 8% 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. Last year, closing auctions in S&P 500 stocks accounted for 16% to 32% of total volumes, a near four-fold increase since 2004, according to Credit Suisse.
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. Last year, closing auctions in S&P 500 stocks accounted for 8% of total volumes, a near four-fold increase since 2004, according to Credit Suisse.