Could a 'Flash Crash' Be Exacerbated by High Dark Pool Activity? ⎊ Path

Could a ‘Flash Crash’ Be Exacerbated by High Dark Pool Activity?

Yes, high dark pool activity could potentially exacerbate a flash crash. If a significant portion of liquidity is hidden, the public order book might appear shallower than it truly is.

A sudden, large sell order hitting the lit market could trigger rapid price declines because the visible liquidity is insufficient to absorb it. The lack of visible institutional buy-side interest in the dark pools prevents it from stabilizing the public price quickly.

Explain the Concept of ‘Iceberg Orders’ and Their Effect on Perceived Liquidity

How Does the Depth of the Order Book Influence the Impact of a Flash Crash?

How Do Dark Pools Differ from Iceberg Orders in the Context of Hiding Trade Intentions?

How Does Front-Running Relate to Information Leakage in Public Crypto Markets?

How Does the Fragmentation of Liquidity between Dark Pools and Lit Markets Affect Overall Market Quality?

How Does the Price Discovery Process Differ between a Lit Market with Iceberg Orders and a Dark Pool?

Why Would a Trader Choose an Iceberg Order on a Lit Exchange over Executing in a Dark Pool?

How Does High Dark Pool Volume Affect Market Efficiency?