How Do ‘Mid-Point’ Dark Pools Operate?
'Mid-point' dark pools operate by matching buy and sell orders at the mid-point price between the National Best Bid and Offer (NBBO) from the public exchanges. This mechanism ensures that both the buyer and the seller receive a price improvement (better than the current best bid or best offer) while maintaining anonymity and minimizing market impact.
Glossar
Mid-Point Price
Calculation ⎊ The mid-point price, within cryptocurrency derivatives, represents the average of the best bid and best ask prices for a given contract, serving as a crucial reference for fair value assessment.
Dark Pools
Venue ⎊ Dark Pools in the cryptocurrency derivatives context are private trading systems that allow institutional participants to execute large orders anonymously, shielded from the public visibility of order books.
National Best Bid and Offer
QuotationStandard ⎊ National Best Bid and Offer (NBBO) represents the highest published bid price and the lowest published ask price across all regulated US exchanges for a security at any given time, serving as the primary benchmark for best execution requirements.