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In Which Scenarios Is Pre-Trade Price Transparency Detrimental to an Institutional Trader?

Transparency is detrimental for large orders in illiquid markets, as it leads to front-running and higher execution costs.
Greeks.Live13.11.25

In Which Scenarios Is Pre-Trade Price Transparency Detrimental to an Institutional Trader?

Pre-trade price transparency is detrimental when an institutional trader needs to execute a large order in an illiquid market. If the full size of the order is publicly displayed (as in a CLOB), it signals the trader's intent to the market.

This signal can lead to front-running or adverse price movement, causing a significant increase in execution costs. In these cases, private execution venues like RFQ or dark pools are preferred.

Define “Price Discovery” and How It Is Impacted by Large, Illiquid Market Orders
What Is the Difference between Front-Running in CEXs and DEXs?
Why Are Limit Orders Generally Preferred for Trading Highly Illiquid Financial Derivatives?
How Does the Use of High-Frequency Trading (HFT) Algorithms Relate to Front-Running Accusations?

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