Series 7 Exam Question 362: Answer and Explanation

Question: 362

The trading volume for some large institutional orders is concealed from the public. What is this called?

• A. Fourth market trades
• B. Dark pools of liquidity
• C. Third-market trades
• D. A violation

Correct Answer: B

Explanation:

B. Believe it or not, concealing the trading volume for some orders from the public is not a violation. Sometimes large institutional investors like to keep the trading volume of some of their orders hidden from other institutional investors. This practice is called "dark pools of liquidity." They usually do this so as not to provide too much information to some of their competitors.