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.