Are you certain IB does this? Hiding a customer's NBBO limit order in a dark pool would significantly reduce the likelihood of execution. It seems unusual that a Smart router would be programmed to park a customer's order in an unlit venue.
I think the reference to dark pools is when sending a marketable order before hitting the exchanges. I don't think it will rest on a dark pool unless you direct routed it there.
I did not say "park" but I know for a matter of fact that IB's smart route sometimes moves execution venues and among those there are dark pools.
Which reference do you mean? Where did you see a reference suggesting that IB routes marketable orders past dark pools on the way to an exchange?
I was referring to volpunter's comment about smart routing. IB's smart routing definitely hits dark pools first, at least in many cases, which you can tell if you check the routing for all your fills in detail. If it went to an exchange, that will be listed; if not, it will be SMART or one of the dark pool destinations.
Volpunter was referring to a limit order, at the NBBO, hidden from the national market. I am aware that more Smart routed market orders for stocks are executed in IB's dark pool than any other venue, but I was wondering if Smart hides limit orders from the national market while exposing them to dark pools.
I disagree. Dark pools have the ability (and, in some cases the obligation, under Reg ATS) to display price and size within the National Market System. I think that limit orders should be hidden only by order of the customer. Not displaying a Smart-routed, NBBO, limit order within the National Market System would reduce the speed and likelihood of execution, while impeding price-discovery and the competitive process that leads to price improvement. Hiding the NBBO also negatively impacts all customers' intra-day portfolio values, when those values fluctuate according to the displayed NBBO.
You talk about things that have nothing to do with this discussion nor did anyone touch on those. But just to be clear, when a customer puts in a limit order into a dark pool then it does not show up in the NBBO. IT also does not have to show up if IB decides to try out a dark pool with its smart order algorithm even when it acts as agent and nor principal. If what you say was the case you would see at times massive limit orders sitting in the order book that can nowhere be traced. That is clearly not the case.