What is a lit pool?
Lit pools are the opposite of dark pools or dark liquidity. While dark venues don't show prices at which participants are prepared to trade, lit pools display the various bids and offers in different stocks.
Where have you heard about lit pools?
The lit pool/dark pool divide has been a big theme on the markets in recent years. In 2011 a brokerage unit of Credit Suisse launched a new stock platform in the US called Light Pool to compete with exchanges and other venues for order flow from traditional trading groups.
What you need to know about lit pools.
A lit pool market refers to ECN stock exchanges where the order book is public for all subscribers. A lit market enables traders to see the amount of liquidity that's posted on the bid and offer of the order book for a security. A trader can use the information they see on lit markets as an indication of the stock's likely near term direction.
The bulk of volume - about 70% - still transacts over the light pool markets. Examples of lit ECNs are BATS, BATS BYX, ARCA, EDGX, EDGA and Nasdaq.