A type of market or stock exchange setting (ECN) where the order book (e.g., securities and price levels) is made public for all market participants. Investors and traders can observe the amount of liquidity that is made available on the bid and offer of the order book for a security. This information provides an indication of the securities likely near term direction. The public trading venues (light pool markets) operate in a transparent and fair manner, setting a level playing field for all players.
Traditional exchanges are light pool markets, as trading information is publicly displayed and every market participants can take part in trading on both sides, acting on the publicly available trading information. Lit pool markets are the opposite of dark pools or dark liquidity (or dark markets). Large orders posted to light pool markets can be easily spotted by market participants, because such orders will be displayed on the order books for all to see.
It is also known as LIT or lit market.
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