easy · Market Microstructure
In a 'dark pool,' why is latency arbitrage less of a concern than on a 'lit' exchange?
- Dark pools are legally exempt from all high-frequency trading activity.
- Dark pools do not display quotes, making it harder for an arbitrageur to identify a 'stale' target in real-time.
- Dark pools are only used for trading bonds, which have no latency arbitrage.
- Dark pools only allow trades that take more than one second to execute.
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