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Exam CSC topic 1 question 47 discussion

Actual exam question from Canadian Securities Institute's CSC
Question #: 47
Topic #: 1
[All CSC Questions]

Which feature is unique to dark pools?

  • A. They offer same benefits and features as regular stock exchanges.
  • B. They block orders with very small bid/ask spreads.
  • C. They are exclusively used for large trades.
  • D. They are generally regulated as alternative trading systems.
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Suggested Answer: C 🗳️

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bc51073
1 week, 2 days ago
Selected Answer: D
In Canada, dark pools are generally regulated as alternative trading systems, and are registered as investment dealers. For institutional investors, dark pools offer many of the same benefits and features as regular stock exchanges, except that investors do not have to post their trade for the public to see. They therefore allow institutional investors to trade large blocks of equities without affecting the market price. In fact, this was the initial rationale for creating dark pools. However, the reasons for using dark pools have changed somewhat over time. Today, dark pools are used for both large and small trades, including HFTs that are designed to exploit price differences
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