About this question
Medium · Market Microstructure · Quant Trader interview question · dark-pools, market-impact, liquidity, execution
A large institutional investor wants to execute a block order of 100,000 shares of a relatively liquid stock. They are considering two options: executing the order in a lit exchange or through a dark pool. Assume there is no information leakage from pre-trade indications of interest (IOIs). What are the primary advantage and primary risk the investor faces if they choose to execute the entire order in a dark pool compared to a lit exchange?