What Is the Conflict of Interest Risk for a Dark Pool Operator That Is Also a Market Maker?

The conflict of interest risk is high when a dark pool operator is also a market maker. The operator has access to its clients' order information before execution.

As a market maker, it could potentially use this proprietary information to trade against its clients, or to adjust its quotes on lit exchanges to profit from the flow. This practice undermines the core trust required for a fair trading venue.