Banning dark pools: Venue selection and investor trading costs

We analyze the relation between transaction costs and venue choice using proprietary transaction-level data from institutional trade executions in U.K. equity market. show that, for a given investor, higher share of dark trading (midpoint pools) is associated with lower execution costs. In context recent ban on trading, we provide evidence consistent migration towards substitute venues such as periodic auctions, which has mitigated adverse effects large investors. also micro-evidence Menkveld et al.’s (2017) pecking order theory over life-cycle parent orders.