Resumen de Dark trading and equity market quality

Rhodri Preece, Sviatoslav Rosov

• Off-exchange trading in equity markets, including broker/dealer internalization and dark pools, has grown in recent years. An examination of the relationship between dark trading and market quality suggests that as dark trading increases, the marginal benefit from it declines. Beyond a certain threshold, increases in dark trading may be associated with deteriorating market quality. The level of this threshold is related to the type of dark trading and the market capitalization of the stock.