Conditional Orders And Indications Of Interest

A trader who wants to sell a million shares can't just place a single firm order on the lit market without moving the price against themselves as soon as it's visible. Conditional orders and indications of interest exist to solve exactly this: they let size get discovered and matched with a counterparty before anyone commits to an executable, price-revealing trade.

How they differ

A conditional order is placed on a venue, often a dark pool, but is not immediately executable; it only becomes a live, firm order once the system detects a matching counterparty and asks the trader to confirm within a short window. This lets a trader "park" a large order across several venues simultaneously to search for a match, without any one commitment. An indication of interest (IOI) is a broker-generated message, sent to a set of potential counterparties, signaling that the broker has a client with trading interest in a stock and roughly what size, a form of advertising, not an order at all, and traditionally used before electronic conditional-order systems existed.

Worked example

A pension fund wants to sell 500,000 shares of a mid-cap stock without tipping the market. Its broker sends conditional orders to three dark pools simultaneously. One pool detects a matching buy-side conditional order for 300,000 shares; both sides get an "invitation to trade" message, confirm within seconds, and the trade executes at the midpoint, with the remaining 200,000 shares still parked, unrevealed, searching for the next match.