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.