Execution risk is the risk that price of a security changes when we are teasing. It says that execution risk increases for dark aggregator algo, but why is that? I mean we are placing our trades in a dark pool for the simple reason of not showing our trades to the market especially when it’s a large trade that may cause price impact if placed in lit venues, but why should execution risk be a concern for dark pools?
Execution risk mean risk in execution of trade, in terms of filling the order and also obtaining target price.
In Dark pools = there is delay = some orders go unfulfilled and some go with no so great price.
Dark pools have fewer potential counterparties than lit pools.