Darker Than a Dark Pool? Welcome to Wall Street's 'Private Rooms'

1. With some brokerages, retail orders are prioritized for dark venues over lit ones (i.e., first routed to see if they can be fulfilled on dark venues, otherwise, then route to lit ones) where they are essentially trading against more knowledgeable participants. A common argument in favor of this, oft cited by dark pool operators and affliated brokerages is that on average, historically, better prices for all participants have been attained with the assistance of dark pools.

Relatedly, on many trading venues, even lit ones, trade orders are demarcated to distinguish between retail and non-retail – a feature visible to larger participants like MMs and one would imagine high volume participants – which is essentially extra information to a subset of participants that indicate that an order is safer to trade against.

2. Dark venues operate outside the standard public exchange framework. Trade orders are not _as_ visible to the broader market. This lack of transparency can disadvantage retail, who don’t have equal insight into the supply or demand of shares. This opacity possibly hinders price discovery of the "real" price.

Oh boy.