What Is the “Mid-Point Peg” Order Type Commonly Used in Dark Pools and How Does It Function?

A mid-point peg is a passive order type where the execution price is pegged to the midpoint of the National Best Bid and Offer (NBBO) from the public, lit exchanges. The order is not visible and rests inside the dark pool.

It provides price improvement for both the buyer and the seller, as they trade at a price better than either the bid or the ask. This order type is popular because it ensures the trade executes at a fair, market-derived price without revealing any information or impacting the public quote.