General questions about hidden liquity pools

Discussion in 'Order Execution' started by Sky123987, Dec 25, 2007.

  1. First I'd like to say thanks for Don Bright for posting a link describing this, however as I started reading it I realized that it was just over my head.

    Some general questions:
    1)In another thread someone talked about how IBs SMART router does not search for hidden liquity pools, but only searches for the best "displayed" price... Okay well why on earth would you want your order to be hidden. That's like sending a buy limit order @ 50.50 and having 50.49 being filled before you?

    2) They say that hidden liquity pools are for algo trading... not sure I understand why.

    3) An estimate on % of orders hidden vs displayed

    4) This article says something like yada yada yada, and then once the hidden order becomes displayed... do these orders have a parameter setting where is becomes displayed after x seconds or after a certain condition?
  2. 1. Usually when large clients don't want their bid/ask to move the market.

    2. Dark pools are useful in terms of transactional cost analysis (TCA).
    Buy side firms are getting the best execution by splitting the trade and using direct market access for some trades and algorithmically trading other parts into the crossing networks with darker pools of liquidity which usually are much cheaper for both buy and sell side firms, this is why major brokerage firms have their own internal darkpool where they will cross most trades before going routing the trade out to an ECN/Exchange this ends up being cheaper for both both parties.