What Is “Information Leakage” and Why Is It a Concern on a CLOB for Large Orders?

Information leakage occurs when a large order's presence or intent becomes known to the market, typically by being partially displayed or inferred from execution patterns. On a CLOB, this can allow other traders to front-run the order, pushing the price against the institutional trader and increasing execution costs.

This is why institutions often use non-displayed venues like RFQ or dark pools for block trades.