easy · Market Microstructure hft
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, so latency-sensitive strategies simply cannot register or route orders there.
- Dark pools do not display quotes, making it harder for an arbitrageur to identify a 'stale' target in real-time.
- Dark pools are used only for trading bonds and similar instruments, and those markets have essentially no latency arbitrage.
- Dark pools only allow trades that take more than one full second to execute, which eliminates any speed advantage.
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