Thank you. Thank you for joining us once again dave. How are you thank you, i'm good, i'm good. How about you? Oh man.

I love this fun afternoon, huh yeah! This is hilarious. We uh, we very much appreciate you coming back on, so thank you. First of all, for that - and here uh recently in the community in the ape nation community - lots lots of questions a little bit of confusion about dark pools. So i was hoping to like pick your brain about that and i know you want to talk about some other stuff at the end, but maybe i don't know the best way to structure this.

We talked about that article. The comments from the new york stock exchange president: do you want to do that first or should we first talk about dark pools and then talk about how that does or doesn't relate to the comments so yeah they're hard to disentangle, so it it's all kind of Look market structure is complex and it's whenever you talk about even in when you talk about reforming it uh you, you pull on a thread and, and it it just kind of, is interwoven throughout the whole system um, so it what i think, the most important thing To understand is with the the comments from stacy cunningham from the new york stock exchange and um, this idea of what's taking place in dark pools and do they affect prices. I know that's like a big question um, so you need to understand the difference. As i was telling you in our messages and why this is it takes a bit of explanation.

You need to understand the difference between pre-trade transparency and post-trade transparency. So pre-trade transparency are the quotes in the market, okay and that's where the national best bid and offer is aggregated from. So you have the 15 stock exchanges and any stock can be quoted within that system. Okay, and so you can have amc or gamestop being quoted on every single one of those where people are posting bids and other and offers, and normally these are high frequency trading firms they make up about 90, i think, or maybe more of all quotes in the Market are high-speed trading firms um? Okay, so that when you post a quote on a lit exchange, if it's the highest bid across all lit exchanges or the lowest offer across all lit exchanges, that that makes it part of what's called the national best bid and offer that information is communicated on a Public market data feed called the securities information process or the sip, so the sip is the the like uh golden rec, like that's the record of what is officially the price in the market.

That's the public data feed and it shows you the best quotes across the exchanges. So this is all happening before a trade takes place that the quotes are being put into the market. The best ones are aggregated and you end up with the national best bid and offer. So let's say you know, gamestop, let's say it's being bid 210 by 211 right.

All trades, regardless of whether they're on exchange or in dark pools, have to happen between the national best bidding offer during market hours. So markets are open. 9. 30 to 4..

That's when there's an nbbo. During that time, all trades have to be within the nbbo. They cannot be outside of it. That's against the law.

It's called the order, protection rule now on dark pools. You don't see any quotes right. That's why they're dark! That's the difference uh, but what you do see is you see trades so when there's a trade on a dark pool, that's printed on something called the trade report facility. It's like the tape.

If you imagine the ticker tape, that's the official tape. It's also part of the securities information processing system, so trades in dark pools are all publicly reported but no quotes. So when you start talking about the information that is in the market, you have to distinguish between pre-trade information, which is the quoting on exchange and post-trade information, which is the trades happening on exchange and off exchange. Now, the the way a dark pool can impact the price is again: let's go back to that example of uh what a 210 by 211 okay.

So if that's the nbo and you see a bunch of giant dark pool prints all hitting that offer all at 211 211 211. You know that someone in dark pools is buying like crazy right, they're crossing the spread um, and so that's going to indicate to the market that there's buying pressure and that's going to push the quotes up, because it could potentially mean that somebody knows that that price Is about to go up and market makers don't want to be short, as the price takes up right, so if, if a bunch of people are buying on the dark pools, that means others are selling to them right. There's always someone on the other end of the trade and those market makers who are really in in this for very short term. Like tick tick, um oscillations, you know they don't want to be short as something is about to tick up.

They want they want to move their quotes up so that, as it ticks up, it ticks up into them. Okay, um, so maybe for a little bit of foundation. Let me reiterate some of that back to and like just make sure that we're on the same page. So when you're trading, whenever there's a buyer, there's a seller whenever there's a seller, there's a buyer, that's how trades go back and forth, and in this world we have a lot of venues.

Some of them. I think you just refer to 15 different, legitimate exchanges. The new york stock exchange the nasdaq ix, those are all venues. We have more venues, also called ats's alternative trading systems, aka dark pools, and these are not lit and the main difference with those.

So i'm showing like the my audience, can see this right now, i'm showing them a level two. So on the level two we see the bid, we see the ask, we see the size and we see a price. So the main difference with the dark pool here is that they they're just seeing that price. The the buys sitting there, the cells sitting there they're hidden like that's the point of a dark pool, is like you can't see any whale buyers.

You can't see any whale sellers and that's all dark pool, and then we also have this unique third option: a non-ats, that's still off exchange and that's more of the retail wholesaler the whole wholesale broker, whatever we want to call them and that's more of um citadel Securities, so those are like kind of like the big terminology, but like is it correct to call the umbrella that they're just all venues, it's the thing that facilitates connecting a buyer with a seller and they all have their little advantages of disadvantages? Of the pre-trade information. The post-trade information and stuff related to that. That's right, you got it exactly, and there are reasons for all three i mean. Obviously, exchanges are exchanges.

That's that's. What the national market system is composed of, uh broker, run, ats's or dark pools are great if you're an asset manager and you want to go, buy a million shares of amc. You know you don't want to put that on the bid, because the price is going to skyrocket. You don't want people to know that you're trying to buy that passively um.

So you know you're going to post. You know half a million shares in in in goldman's dark pool, you're going to put half a million shares hidden uh, maybe at iex, because you can you can post hidden orders on lit exchanges as well. So you can, you know you can put iceberg orders there. All sorts of different order types you can use as an as a large asset manager to try and build a big position without the market, necessarily catching on to the fact that you're trying to do that.

So they can only hide it to a certain point, because it's still reported in volume like if someone really did their like sherlock holmes, detective work, they're gon na find it because, like oh yeah, it's just these quantitative systems are looking at the trade feed. You know trade by trade, every single trade - that's happening, they're profiling, it they're understanding. You know how aggressive was the trade relative to the mbvo um? Have we seen this trade size before? Is someone buying 222 shares like over and over and over again, because it's in a weird algo, you know they're they're, seeing okay, what's the toxicity of each trade, you know what what's the near term price movement immediately after that trade prints, there are all sorts of Algorithms, looking at that trade feed very closely, so very specifically one thing that i know a lot of my audience is going to be interested in when it comes to the world of failure to delivers and naked shorts. Is there any advantage at all for a dark pool and no these things are not connected.

Okay, yeah, because it's just any venue like i, my understanding was naked shorts deal more with the broker, not locating shares, and it doesn't matter where the trades actually executed exactly. I think there's a bit of misinformation of like somehow naked shorts being parked in dark pools, but that's just like, maybe not us being up on terminology of how it's done. It's just a different place where traders and buyers are connected. Yeah yeah, the the the when you're talking about shorting um and whether those shorts have a locate or borrow you're talking about an entirely different set of back office systems.

So what i'm describing is is usually referred to as front office. That's where trading takes place. The back office is where trades are cleared, settled and reconciled um, and so that's that's, that's really completely different. Okay, so front office versus back office yeah.

The reason that maybe there there might be a connection in some people's heads, for example - you know - let's say you have this uh internalize or a wholesaler, and you think that they're amassing a large short position, because you know there's a wave of fomo and everyone goes To buy gamestop or everyone on retail goes to buy amc right, and so they just start crossing the spread, buying, buying, buying and you're the market maker and you're selling to them right and you're happy to sell to them because you're, you know presumably you're. You know, there's there's a spread that they're crossing and you're expecting to make that spread, but if you don't make that spread and it keeps going up because this buying and you're just selling selling selling selling all the way up, you are potentially amassing a very large Short position because you're taking the other side of all these trades, that's been that's your agreement with the retail broker. Is that you're going to take the other side of that trade? Now a lot of these wholes? The wholesalers are excellent at risk management, and you know the they will tell you and take this for what it is worth. They will tell you that they are simply there to make the spread and not amass a large short position, whether that's true or not.

I'm not gon na. You know no reason to comment, but what but the way they describe their business model is that they're there to make the spread and if it's getting away from them, they're going to go uh. You know they're going to go, lay off into the lit market, which is why the lit market tends to get this this toxic order flow. So it again my whole point there is.

There is some level of a nexus because you know if a wholesaler is being bombarded with by interest, they will amass a short position um and then what they do with that short position, you know that that's not connected to the dark pool or the internalization. That's either a back office thing or a you know they close out the short position in another venue. Is there any potential tactic involved in buying or selling to create a position on a dark pool and then doing the opposite on a lit market? Is there some tactical advantage of why you would want to do that of creating a position on a dark pool and then unloading it the opposite way on a lit market in a short time period? Can we in can that influence a stock up or down in a short time period, um yeah, i mean it can certainly influence the price you know like. I was saying on cnbc yesterday right if, if citadel vertu um see together, 70 of all amc or gamestop volume, right, um, then and they're also the ones quoting on exchange, they are seeing, for example, if there's a wave of buying coming they're, seeing that before anyone Else, okay, and so that it doesn't have to be like a nefarious way of of of filtering out from that right, like they're they're when i say risk management, a lot of that is position, management and portfolio management, and - and so you know, if i am like, I said: there's this wave of buying coming and i'm getting short.

You know. I know that this is problematic because that wave of buying isn't just coming to me. There will be other places it comes to and and that buying pressure will translate it. You can't keep it off exchange, so the lit quotes will have to adjust and if i'm the market maker, i know that and then i can adjust them because i'm trying to get out of my position right, i'm trying i i want um, you know i've.

I'm now short i want to buy. I want people to start selling to me, so i'm going to raise the price i mean that's how markets work right. You know if people won't sell at ten dollars, i'm gon na raise it to 11 and try and get them to sell there, because i want to. I want to buy, and i want to get out of my short position.

Okay, so like one of the common questions is like does buying selling on a dark pool impact price, and it kind of sounds like it's. Yes, but also, sometimes no because in the scenario where there's a hidden whale trying to buy if by some theoretical chance, statistical chance, there's also a hidden whale trying to sell well, those would go through and no one would be the wiser. We would see it in trade volume, you could see the print yeah yeah, you can see the print and a lot of these places. You know, for example, you might see it at a midpoint, and so then you don't even know who the aggressor was.

So that can happen and and so large midpoint prints um can i i've actually i've seen it both ways um, but i would say, generally speaking, because i've tried to measure this kind of thing in other situations like what does a large midpoint print do? Do you see like follow-through uh after that and um? Sometimes you do, but often you don't, because it's not it's not clear that there was an aggressor there, but there are other situations in which yeah, like two whales find each other, but one crossed the spread. And again, so you you see on the tape that the market was this. You know when that printed and the trade happened at the offer that meant that the buyer was willing to cross the spread, but again you're. You know it also means there was a seller at that kind of size.

So you know block trades, which is what we're talking about um, which was the original purpose of of the dark pool and the broker run ats um they. You know they often don't impact the the the tr, the the lit exchange price as much as consistent small trades, which show more you know consistent pressure, either way buy or selling. But last time we were speaking, you kind of said that that was the phenomenon we're seeing is like. The initial concept was for block trades to be like a little bit more hidden, not spook the market.

But now i think you were saying that now we're actually seeing a lot of relatively smaller trades, a couple hundred lot sizes on dark pools. Yes, all the time i mean the average trade size here, i can give me a second. I can pull it up for uh. Last month, um i've got some market statistics here, um, let's see so yeah the average trade size on the top two dark pools uh last month, so uvs uh had 20 percent market share and sigma goldman's darkfield had 10 market share that both had the same average Trade size 102 shares um, so yeah, you know: they're they're, institutional brokers, posting large institutional orders in their dark pools, um and then the fills that their clients are seeing only average 100 shares again, i think that's kind of silly yeah.

So, what's your take away from that, though, of like, if there's an immense amount of smaller lot trades, what are they going for there like? What is that that influence, and, what's like, i guess, the end result? Well, a big part of the end result is that you, you still brokers, use their dark pools for because of fees, that's that's one of the main reasons: um they don't pay to trade in their own dark pool, um, okay, and so one of the you know Going back to something you asked before, which is there? Is there a strategy where you, you know, accumulate a position in in one venue and then you know offload it in another? Yes, and that can also be very much driven by fee structure. So remember what i said: you pull one thread. You start to get into everything. The the fee structure of the markets is also extremely complex.

Uh there is tiering for a certain volume. You know if you, if you do enough trading on the nizee, for example, you'll get a much bigger rebate for your passive orders and if you don't do as much and and the fee structure is so complex um, i had a great slide on this uh it. It there are like thousands of different fee combinations across exchanges across the 15 exchanges, so the complexity that the fee structure introduces also is is almost mind numbing and it's become the main thing that exchanges compete on, which is also something that doesn't make much sense. Um we're talking about the 15 exchanges.

How many dark pools are there roughly, i usually say around 40. um it. Let me see um, it's it's something like that yeah. So with that, when we have roughly 40 dark pools, roughly 15 exchanges and then how many ever like non-ats's there are, is it good or bad to have so many different venues? Oh, i think it's very bad.

I i think this level of this is what we refer to as fragmentation and the the fragmentation in the market is extraordinary, uh and unnecessary um, and it's it's not because it's an optimal outcome for markets. It's because of all of these different parties, business models, um and and and the way that regulators have set up the system. So even just this thing that i referred to before is the order protection rule um, which means that if you have a quote on an exchange, that's the best quote in the market. You have to route to that exchange, you're not allowed to bypass.

That quote, so that makes it so so that all of these exchanges are viable, because one of them can just start up offer huge rebates, get orders posted on it, and then everyone has to connect to that exchange um and that's in fact exactly what happened with This exchange called memex um, i think last year or maybe a little before that, but which is owned by uh citadel and others um. And then you have um other things that keep exchanges in business uh like market data revenue sharing from from that securities information processor, the sip generates hundreds of millions of dollars of user fees every year, which is split amongst the exchanges, which is a subsidy to exchanges And in fact, many of them the biggest exchanges families make a hundred million dollars a year just from that subsidy, it's a very large part of their annual revenue, um and and and then you have. You know this unfettered ability to create dark pools and ats's on the on the part of brokers, but it's not just about the fact that they anyone can create one which is a good thing, because it leads to competition. But it's the fact that anyone can execute anything on a dark pool, whereas that's not the case in other countries.

So canada, for example, has something called the dark pool rules and they are one of the simplest sets of rules in market structure. What they say is if you want to execute something off exchange it either has to be a very large order, a block or it has to get receive material price improvement, which means that you have to price and prove that order at least a tick. If the spread is more than a tick wide or you have to match it at the midpoint, if the spread is just a tick wide and and that's a philosophical rule - and it says that we recognize that having all this off exchange trading is a bad thing And therefore, we want to set rules up to makes to make it so that more people are executing on exchange. You have to execute on exchange if it's a small order, that's not going to be materially price improved and, i think that's a great rule and in fact i saw a study um.

The ceo of a very large high frequency training, firm, uh who's on twitter, alex gerko, uh he's the ceo of xtx markets, and he would i mean almost agree uh with i i'm pretty sure you would agree with almost everything i've said so far: um and uh. He put his firm put out a study showing relative execution costs on exchange uh with the us versus other developed nations and we're actually not very good. So we think we have the best markets out there, but in fact the the cost to execute on exchange and the spreads that people see in the us markets, even though they look good. They only look good because we're the most liquid market in the world um.

If we had the levels of liquidity as others, we would have far worse execution costs and and a big part of that is from fragmentation and from the fact that you can execute anything off exchange without material price improvement, um. So the little bit uh one of the aspects i get about this is um talking about non-atss um. I understand that citadel has successfully segmented all of retail trading and their argument with it is because they've segmented, they could do a better price and that's their argument. But in a way it's an upping the competition within dark pools.

It's also upping competition on the exchanges and when they make that argument, you've referred to that argument as being disingenuous. Do you think it's intentional that they know that they're arguing a red hat ring, or do you think that they're actually like they truly believe in that argument and they're just kind of running with it and they think that's a better for the market? Let me um. Sorry, if you give me a second i'm just going to read to you a quote from citadel, the practice of payment for order flow, creates serious conflicts of interest and should be banned. Internalization without meaningful price improvement, reduces competition limits.

Price discovery leads to market fragmentation and should be banned. That's a quote from citadel from 15 years ago, right before they made their own uh. What a world we live in so do they know that the argument they're making is disingenuous. I mean yeah, there's documented evidence and and when they say that that retail is getting the best price, it's it's they're, measuring it against the nbbo in the market, which is flawed in many ways.

Uh one of the things that stacey was talking about was that it doesn't include odd lots, um and should so that's one problem um. The other reason she's saying that there's not that the mbbo doesn't reflect supply and demand in the market is because, if 70 of this is off exchange, it's not reflecting that - and you often hear retail referred to in many different ways right. Certainly, the dumb money is one of them um we uh. The term i had heard when i was um back in trading.

Was the juicy flow so that the reason is that when, when a retail investor places an order, they're usually crossing the spread and they usually don't care, what happens uh to the price of what they're, buying or selling over the next 10 seconds? Let's say to pull out a time period right: they certainly don't care what's about to happen over the next 50 milliseconds. So what that means is that retail order flow is relatively noisy, and so, if you want to make your money by buying and selling and capturing the spread, retail order flow is what you want to trade against, because it will often just bounce back and forth between The spread um, that's that's what that means. When you hear dumb money or juicy flow versus the smart money or the toxic or informed flow, which knows that the price is about to change and slams the market, you know, then the market shifts and that that market maker, just uh got hurt because they just You know were on the wrong side of a price movement um. So that's why retail order flow is profitable to trade against.

If it were to all come to exchanges versus being segmented by citadel and virtue, then hundreds of market makers could compete for that order. Right and they can make markets tighter and tighter and tighter, because they'll be making more and more money. So when i argue for open competition for order flow and when i argue against internalization, i'm arguing that market makers should make more money, not not the duopoly. But the others right, yeah and, and that leads to more diversity in markets, and it makes markets thicker and more resilient and uh more stable.

It improves liquidity for everyone. So the study that i cited yesterday, which looked at this and said if all of that retail order flow, were directed to markets and market makers made more money and made spreads narrower. How much would those spreads narrow and the estimate was 25 or more? That's a huge number: that's billions and billions of dollars a year in spread costs that people are paying to keep this duopoly in business, wow wow. So, but is there a game plan in more like a multi, whatever a decade or two out, if, like obviously they're, not dummies and they're, making these decisions? So if it's detrimental like, are they basically running a system down in the ground that, like is like? Are they biting the hand that feeds them or is their idea to go to keep the duopoly running and just keep like gutting the retail public yeah i mean man, you can print money.

I guess you print money as long as you can right. Yeah, i mean it just seems like you're almost like, maybe maybe not the the loudest ticking time bomb, but like we're heading in that direction, almost seems like if there's just like this much influence that these the duopoly has yeah. I i think it's. I think it's something you find in wall street regularly.

Is you know powerful firms making a lot of money, uh incredibly resistant to changes that seem kind of obvious to a lot of other people? So if we get the concept from back to dark pulse, if we're understanding the concept of okay yeah, i get - i don't even know if i'm necessarily just straight up against stark pools, because i get that point of competition. Sometimes you want to play with your cards. Close to your chest, you don't want someone to see that you're buying a lot or selling a lot. So if that is how it's pitched - and you also brought up fee structure like sometimes it's just better - to execute on a dark pool because you're going to pay less money, why not? What would you list the top couple like like with those pros there has to be cons? What would you say are some of the obvious cons of dark pools in our system right now, yeah? I i think that it's a really good question, and it goes back to what i was talking about in terms of like the counter factual of canada, which i think is just a it's a very good one because of this rule that they have in place.

And you just see a couple of dark pools, not a lot um and you just see a little bit of trading. I don't know what the latest number is, but i think it's probably 10 or less i i might be wrong, but it's it's of that order of magnitude. I haven't looked at in a while, but you know that's it when they first put the rules in place. It was something like 30 was off exchange, they put the rules and it dropped down to like seven or eight percent um and - and that was what they were trying to do, and so they didn't worry about the costs of doing that because in canada, just as An aside, it's hard to evaluate absolutely what changes the effect of changes that you're making, because you have the us right to the south and the u.s.

There's a lot of stocks that are interlisted between the two markets and so flow can just migrate down to the us and, and it it's problematic, for canada puts them in a bad position because it makes it difficult for them to enact changes that they think should Be made because of this prisoner's dilemma of the race to the bottom, where you know, if u.s regulators don't make the same changes you know, then the flow will move to. Whoever you know has has found the bottom um. So that's problematic, but you know to get back to it. You know, i think the con is lots of small orders being executed on dark pools is not a good thing, and lots of segmentation and fragmentation is not a good thing, um, so fewer dark pools where large institutions can find each other um make a lot of Sense to me, innovative dark pools, make a lot of sense to me.

That's you know. Iex started as a dark pool and then became an exchange there's another one called coda that has these like little micro auctions that take place, so they don't actually have what we're used to you know. If you show that level two book, that's called a continuous order book um there are other models which are called periodic auctions or batch auctions. So the continuous order book is the thing that incentivizes speed the fastest person at that price level gets to the front of the line, whereas the an auction model does it.

It means like. Let's say you have an auction every five seconds or every hour or something it means that you disincentivize speed and really incentivize the best prices and and so that the auction model is really interesting. So you know novel matching models and and novel um. You know order types, and that kind of thing are great, that you know that a lot of that happens in dark pools before it makes it to a lit exchange, but, having so many and having unfettered off exchange trading.

I i think that that's damaging markets - and it's i mean that's what the the studies show with damaging markets and i think that's what gary gensler is talking about too at the sec with uh. You had some comments about about 50 of volume going through dark pools. Amc gme, specifically almost higher to 70 percent. I was under the impression that there was actually limitations.

The fact that it is a dark pool, we kind of limited how much volume could be traded there. Is that not accurate um? There are limitations. I believe - and it's been a while, but i believe that you can't trade more than five percent of a name in an ats. If you do, you have to post a quote and that quote becomes protected.

So all of the broker-run darkpools have caps to make sure that they don't exceed that because they don't want to post a quote in anything. I don't believe that that rule applies to the otc training that takes place in internalizers in the wholesalers interesting, so um and more of a higher level thing right now. Um, if dark pools are more of a front office thing and the concept of naked shorting is more of a back office and what we're hearing about dark pools. It's it's it.

Clearly, it's attached to your world of high frequency trading, the bid here like we're talking about the spread, but in the retail public, a lot of us got into amc jimmy way, lower we're looking for it to go to the moon. Ascent here is sent there like it's not going to have the biggest impact on our lives so to the retail public. That's saying that like okay, this is an interesting stock market plumbing discussion, but i don't really see how it like impacts. The money in my wallet like what would be your response to that of like no, you should actually still care yeah.

I i actually think uh this stuff will add up, i'm actually, so you know we started to talk about uh. You know one of the things i want to talk about is this new project irvin.finance and um, one of the things that we would like to try and facilitate. There is actually that direct cost question so in in the world of institutional asset management. You know if i'm buying a million shares of something i want to know that my broker did a good job doing that or i want to go to a different broker, and so that's called transaction cost analysis and it's something: we've done for institutional asset managers.

For years now we it no one's doing that for retail, because you don't just you - don't have enough data right with your individual trades, but if, as part of our the the feature that we're thinking about in terms of facilitating uh communities to share data um, if Everyone could pool their fills together. We could actually, then, from for retail figure out um what it, what it really cost you right. So, let's say, on the one hand, you've got people trading through a broker that just accepts payment for order flow and doesn't offer hardly any price improvement and on the other hand, you have broker, who doesn't accept payment for order flow and gives everything to their client. In price improvement, i i believe that over time that's going to add up, it might only be 20 bucks, it might be 100 bucks of difference, but it's different and it's and it's certainly something that i think is worth measuring because it hasn't been measured yet.

So i i do think, there's a direct cost to understanding some of these things, but there is very much an indirect cost, which is you know it? I know a lot a lot of people who watch you. I assume have a lot of their money in these stocks, but if you look at retail wealth in general uh, most retail wealth is held in mutual funds and pension plans. Um, that's where people's retirement savings are that's where their savings for their kids for college is right, that's where most wealth is held and those firms have to transact very large orders they're the institutional asset managers that i've been talking about and if the spread is artificially Widened by 25, because all these retail orders are siphoned off. That is a real cost uh to where we, where most of us hold all of our wealth, um, and so you know, i think, that's a very good reason to care, maybe not uh.

You know people who just are holding um all their all their uh. You know portfolio in amc and gamestop and such, but you know maybe your parents, uh are holding their. You know their money in other uh securities like mutual funds and etfs, and that kind of thing and - and you know, even if, if you, if you're, not holding everything in in a meme stock um, you know it's uh, it's something i think everyone should care about. Could you tell us a little bit more about the project you just named of like how you're doing that with the data and like where you want to go with that? I guess that seems pretty interesting yeah.

You know i again: i'm i've only been sort of introduced into this movement and community over the last two months, uh, despite sort of watching from the outside, for a while um, but really kind of getting more into it over the last couple of months and i've. I've kind of been shocked at the level of data that people have access to, and so when they see things like trades happening outside the nbbo and dark pools, and they think, oh you know, that means anyone can print anything at a dark pool. There's a reason that they think that's because it's because their data is horrible and because no one is incentivized to give a retail investor good data because they're, not you know, every data is an afterthought for your broker. They don't really care what kind of data you're seeing they're not going to put any effort into it, even the ways that they do data visualization and allow you to do research.

You know that it it's some nice feature, but all they care about is getting you to trade and generating those commissions or the payment for order flow right. They don't care about the quality of the data and tools that they're giving to you, whereas on the institutional side, we're very much used to working with the best data, extremely clean, extremely accurate high resolution, data um and the best tools and data visualization systems, and so Um, our idea is, let's bring it to retail and and the reason that it hasn't been provided up until now is because people haven't paid for it and, and so and the data costs money. It's not. I.

I think this is maybe a misconception they're all like. I was explaining before in terms of complex fee structures. Market data is one of the most complex, and so there are all these rules about showing individual users raw data, and that's why these brokers don't want to get involved in that because they don't want to trip over those rules and have it cost them. A lot of money so we're working with a market data vendor to figure this problem out and to figure out the absolute lowest price point that we can provide the highest quality data so step.

One for us is: let's get data and better ways of visualizing that data in the hands of the everyday investor um, and then i've also loved to see the dd that is taking place on reddit, and i think i think it's cool. I really do. I think there is something really special about this sort of hive mind that is researching something together and i think there's a way to do it in an even better way, which is to actually have a platform built for that built for collaborative due diligence and research. That can integrate this great data with these good.

You know new ways of visualizing and analyzing running analytics across the data and then having multiple people work on the same thing um it doesn't have to be, but, like you know at least you can now integrate all of this data and all of these data visualizations On a purpose-built platform for doing financial research and then publish it out to reddit and twitter or whatever you want to put it right and we're not trying to displace those communities by in in any way we're just trying to say, let's, let's you know, give people That want to come together the tools to do that um and then facilitate that kind of research and - and i think that that could bring it. You know - i. I really think that could really bring it to a new level in terms of accuracy, um and in terms of the ability for people to pool their efforts, rather than you know, kind of do this individually talking about the validity of data, so one of the common Things where i'm using right now for amc and gme is through a platform called ortex, i'm looking at shares on loan. That's like like.

I know it's not perfect for the amount of short shares, but it's highly correlated and it's better than nothing. But one of the things i'm getting for feedback from this community is we're now uncovering the fact that prime brokers are the ones kind of setting up naked shorts they're, the ones that fought for it and then, when we're telling them that this data is coming from. Prime brokers, there's a very obvious and reasonable sense of distrust so, like i guess you have comments on that of like the validity of data, and how do we know that, like they're, just not lying to us when they give you the data feed that you're paying For yeah i mean i and when you get into shorting it's it's a hard question um and i i have seen several different techniques out there for trying to get around that issue. Um and i'm not i'm not really sure how good they are.

It's something i'd like to spend more time on um, and i just haven't had the time uh to really deal with it, and and you know so, the the other side of it is uh. You know, building an organization like this building a platform like this. Would let us devote that kind of time, because in my mind, any data set that would get onto this platform would have to be curated. You know it would have to be reviewed by experts and would have to be put into context right.

We need to tell you what this data set can say and what it can't say and make sure that there's sort of full context and understanding around each of these data sets. So i guess in the system we're in right now, like we'll talk about failure to delivers with prime brokers and we're getting it. I to my understanding the bit of research. I've done is there's a hefty fine.

If prime brokers are knowingly passing on false information like they could get in like a lot of trouble, so just from the fact of them like right there, they just don't want to take that on. Like the whole, i guess game of being a broker is minimal. Risk and you just start trying to facilitate trades. So for that reason i trust it, but what about like governmental, structural issues that at best, we always get our failure to deliver two weeks late at best like? Why can't we get that the next day to know the failure to deliver? Is that or like just in general, like that like? Why do do those things take so long to get yeah? I i totally agree and and and i i got ta say that finra is trying to figure this out now.

Um, it's sort of a an ad hoc system. That's been put into place. You know one type of disclosure on one cycle showing one thing. Another type of disclosure on another cycle showing something completely different and the two can't really be brought brought together, but people do because they don't understand again.

The context of these of these data sets um and finra, has put a notice out there asking for comments exactly on this and asking you know what should this disclosure regime look like what needs to be disclosed on what timeline and and the industry will always push Back because they will worry about things like reverse engineering and and other costs associated with more disclosure and the public needs to be there to push back on that and and needs to push and say no, we want this. This is important and here's. Why and and so that's why, i always you know post those kinds of uh requests for comment, because the the public commenting makes a difference and when there's public popular attention on something, especially as esoteric as market structure. Um regulators aren't used to that and so there's no way that they can dismiss it.

They they do have to pay attention to it. When comments are, are thoughtful and - and you know reasoned so for things like that, if the retail sends up and they're like hey, we don't want payment for order flow. We want faster reporting, just generic things of like hey. We think this is better, but what about things that are, i guess like more difficult to prove like, for example, i know naked shorting is illegal and it's more like people are finding loopholes or they're doing it accidentally, whatever have you, but what about things like there's? Some people who have they feel strongly of the fact that prime brokers are marking short positions as long positions and then they're just not reporting that or they're covering up like failures to deliver.

It's like you were even saying of buying a bunch of like calls and they're like no, no we're good like how do we fight that particular fight when we don't even have the data on the situation where, like we think this is going on, but just inherently They're messing with the data, so we don't have clarity on it. I don't know yeah. I don't have a good answer for you on that. Unfortunately, i mean, i think when, when you comment, for example, it's very reasonable to bring this kind of thing up and especially cite past enforcement cases, of which there are plenty in which that kind of thing was found.

I i think that it's an issue that um so far has kind of been swept under the rug and now that there's a lot of attention on it, my hope is that it won't be able to continue to be, and it's the kind of thing that you Know is being continuously brought up to regulators and and honestly, like public perception matters. So let's say the regulators completely disagree that there's an issue here and they think that the public is completely misunderstanding. Um what's happening, they are convinced, there's no naked shorting and they think it's purely pr and perception issue even that matters right. They will care that there is such a fundamental perception issue, which i'm not saying that that's what this is, but even if that's what they think, then they will care and they will try to figure out how to get the right data out there to try and Counter that and it it would hopefully be that in that data you would then be able to prove or disprove uh.

You know this this idea and this thesis so with perception being so important. Like a lot of the, i mean without naming names, there's very obvious: mainstream media characters who, like they look at us and it's one thing if they're just like, i guess the retail public, but then i think some are a bit more malicious of saying, like no. What they're doing is manipulation. People like myself deserve to get in trouble with the sec and, like i guess, from a moral philosophical thing like i i'm doing my job to present data.

Do you think, like out of the host of issues that the sec should be looking at, i mean: do you think some our group, the ape nation group, should even make that laundry list of problems like do you think the retail standing up the way we're doing Right now, like do, we deserve a slap on the wrist. I think that grassroots movements um are not going to be a concern when, when my interpretation, for example, when gary gensler in his testimony talked about uh social media and market manipulation, my interpretation of that is that he thinks there are nefarious actors trying to manipulate things Through reddit boards right, the the so-called you know, shills fud spreader, whatever you want to call them, but but you know i i and and of course there are right yeah. Obviously all right wall street loves a pump and dump they never met one. It didn't like.

So you will have bad actors um, and so i think that's what he's saying that that if there are examples of malicious or manipulative concerted organized efforts, that's a problem right. If, if you are amassing a very long, a very large long position and then coming out - and you know you know really going crazy saying - i'm giving you financial advice - you should buy, buy, buy right. What are you? Are you insane you're not buying, right and and then, as it goes up, you're selling into that right? That's that that's manipulation, there's a difference between manipulation and talking your book, there's nothing more natural on wall street than talking your book. Okay! That's! If regulators tried to go after people for talking their book, forget about it right, the whole thing will fall apart, um, so it it.

Maybe it's a fine line, but i i that's my interpretation of what he's talking about and i wouldn't worry um provided you know you have to make it clear: you're, not a financial advisor and no one is here and no one's telling people to do anything. They're presenting information, they're, letting you everyone make their own judgment um and i think that's very important, and you know i i don't know if you heard when i was on tv yesterday, but you know they tried to say. Oh well, you know, can you say right now that citadel is manipulating markets? I'm like no, of course not. I would who would ever say such a thing.

I know what kind of legal problems that would bring. You know i you have to be careful right because, especially in the media they're trying they're trying to trap you and get all they want is a headline. They don't care if they put, you in you know in undue danger right yeah. Unfortunately, i agree with that.

Um in terms of your own commentary, just that article that i sent you um about the new york stock exchange president, that commentary now that we have a bit of a more in-depth understanding of dark pools. When i read through this to me, it was more of a jab at citadel's non-ats and not necessarily dark pools is. Is that the proper interpretation of this article, i think so yeah i mean obviously 9z - wants all dark pools and off exchange trading to go away? Um, but i i think what she's really talking about, especially in those names, that's where you can make the argument when you, when you have more than half trading off exchange in a certain name. You know it's very it's a very uh, cogent argument to say that the mbbo does not reflect supply and demand and that's a problem interesting, oh great um.

First of all, we really really appreciate your time. Is there anything else you want to share with the community right now, uh? No it you know, i would just say, go to urban dot finance um, it's uh! It we've got a page up there and we're just trying to see um. You know what people are interested in in terms like the platform that i described before, like what features are important. We we really want to engage with the community in every way possible, uh we're going to crowdfund part of the investment and and give people an equity stake.

We want this to be a completely community driven effort, um, and so you know the more we hear the better and you know we're really excited to kind of get this off the ground. All right awesome. I will right now show everyone, your twitter and while i'm bringing that up, could you spell the website just so everyone can actually track it down. Yeah, uh, irvin, it's! U r! V! I n dot finance! Thank you and i'm just showing everyone to twitter.

So they have a better idea, um at d-l-a-u-e-r um that stays twitter there, just so, if you're paying attention, if you need to reach out to a message them uh, this is one potential avenue to go, but uh as always, it was super super enlightening. Thank you. So much for your time, i think the community learned a lot and enjoy your weekend have a good one, great thanks, matt! You too appreciate it. You.

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