Slicing algos blamed for market impact on dark venues

Fragmented markets contribute to sixfold jump in possible price moves

raindrops on water

The cost of trading stocks in dark venues has ballooned over the past three years, a trend market participants blame on algos scouring the market for liquidity by slicing up orders into smaller portions.

The potential market impact of block size trading in dark multilateral trading facilities has jumped sixfold, and nearly doubled for sub large-in-scale (LIS) dark venues in the three-year period since March 2021, according to data from analytics firm big xyt.

A buy-side cash equity trader says

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