In this paper we examine dark trading by examining hidden orders that are submitted to exchanges. Using the SEC MIDAS data set, we examine whether or not trading that arises from theses hidden orders are associated with more or less efficient prices. We find that hidden orders are associated with less efficient prices, and place these results in the context of previous literature that has examined dark trading by identifying dark trading as trading that happens off exchange. We corroborate our results by examining an event that is associated with less efficient prices, price reversals. Our results indicate that hidden orders are associated with these events, suggesting that hidden orders have a detrimental impact to price efficiency.
