DARK POOL QUESTIONS? BIDS TRADING GIVES YOU ANSWERS! The number of dark pools continues to grow and according to a recent Greenwich Associates* survey, many institutional investors do not have a clear understanding of what differentiates each pool. Greenwich Associates published 10 key questions that an institution should ask when evaluating a dark pool. To make your dark pool selection easier, BIDS Trading has provided answers to these questions. 1. Is your pool a true dark pool, (i.e., completely anonymous, without any information leakage) or will information regarding my orders be conveyed to potential liquidity providers? The BIDS Trading ATS is a true dark pool. BIDS Trading provides the institutional community with a place that they can safely and effi ciently trade blocks. BIDS Trading does not have liquidity partners and does not send or receive IOIs. 2. Does your platform route orders out of your dark pool or from any other system connected to your dark pool, including your smart order router, to ECNs, ATSs or any other external source? Except for satisfying Reg NMS requirements, the BIDS ATS does not route orders. 3. If you allow indications of interest (IOIs), is it an opt-in or an opt-out process or will this decision be made for me? The BIDS ATS does not use IOIs; orders are not exposed to other destinations. Our solution to fragmenta- tion is the Conditional order. A conditional order is similar to an IOI, but with accountability. Conditional orders allow traders to search for liquidity in multiple venues by representing their orders in our market as conditional. If volume becomes available, the trader will be invited to fi rm up (i.e., commit their order to the BIDS ATS). Since conditional orders allow for some pre-trade information to be dis- closed, the BIDS ATS keeps track of how often a trader fi rms up when they are presented with a liquidity opportunity. BIDS ATS users can then fi lter out counterparties that have a low score (based on how they responded to previous invitations) or can even choose to completely opt out of conditional fl ow. 4. What information regarding my order will be included in an IOI (symbol, side, size, and/or price)? We do not send out IOIs and we do not accept IOIs. 5. What type of order fl ow populates your dark pool (i.e., proprietary orders, retail orders?) The BIDS ATS is open to all order types, including broad-based institutional, algorithmic, single-stock and program business – from both the buy side and the sell side. BIDS Trading does not engage in pro- prietary trading. 6. How do you count matched volume (single or double count) in your dark pool for purposes of what is reported to the tape and advertised, and are orders that are routed out of your dark pool and executed 111 BROADWAY, SUITE 1603, NEW YORK, NY 10006 :: 212.618.2060 :: 877.566.2437 :: BIDSTRADING.COM by another party counted toward your own volume? Volume is double-counted to include all volume traded on the BIDS ATS (i.e., both sides of the transac- tion). However, when we report our volumes to a TRF, they are single-counted. We also broadcast our single- counted, top-traded names (post-trade) on Bloomberg. 7. Do you match within the spread or at the spread? The BIDS ATS supports both auto-matching and negotiations as methods for trading. The default setting for auto-match is at or within the NBBO. The BIDS ATS will attempt to improve both parties to the mid- point when possible. Negotiating allows traders to interact with orders when no auto-match is available. A negotiation may be completed outside the NBBO. 8. What anti-gaming controls are in place? The BIDS ATS provides the following anti-gaming tools: Behavioral Profi ling – BIDS Trading ScorecardsSM and BIDS Trading FiltersSM give traders additional con- trol over their trades, letting them decide to whom they want to disclose information. Scorecards identify potential counterparties based on their past trading behavior in key areas. While traders never see their counterparty’s scores, they can fi lter out traders with certain undesirable behavior. Minimum Block Size – Each trader determines their minimum trade size, on an order-by-order basis or a default percentage on all orders. No counterparty with a size less than the specifi ed minimum will inter- act with the order. Price Discretion – Traders can set price discretion so that the BIDS ATS will invite an order that does not cross, but is within the trader’s price discretion, to negotiate. Since this is a situation in which in- formation will be disclosed, the BIDS ATS ensures that the disclosure is desirable to both parties – each trader’s scorecard is compared to the fi lter of the other trader before any information is revealed. 9. Do you have a minimum size limit? The BIDS ATS does not set volume minimums. Each trader determined the size of a block, on an order- by-order basis or a default percentage on all orders. No counterparty with a size less than the specifi ed minimum will interact with the order. 10. How will my orders interact with your proprietary orders in terms of priority BIDS Trading is an ATS and does not engage in proprietary trading. However, our pool is open to all order fl ow from our users. The BIDS ATS executes in price/volume/time or volume/price/time priority at the user’s discretion, which can be pre-empted by minimum size designations and the use of fi lters. *Greenwich Associates interviewed 64 equity investors at hedge funds, invest- ment managers, mutual funds and pension funds in the United States, Europe and Canada. Interviews were conducted on the internet in the last week of June and the fi rst week of July, 2008. 111 BROADWAY, SUITE 1603, NEW YORK, NY 10006 :: 212.618.2060 :: 877.566.2437 :: BIDSTRADING.COM.