How Does the Concept of ‘Price Improvement’ Relate to Dark Pool Execution?

Price improvement occurs when a trade is executed at a price better than the prevailing NBBO (National Best Bid or Offer) on public exchanges. Dark pools typically offer price improvement by executing orders at the midpoint between the NBBO bid and ask, or sometimes slightly better.

This is a primary incentive for institutional traders to use dark pools, as it reduces transaction costs and provides better execution quality than a direct public market order.