How do brokers handle “hidden” stock orders?

What is a hidden order?

A hidden order is a trading order which instructs a broker to break up a large order into multiple small segments which are sent to exchanges as individual orders.

What is a hidden limit order?

Many limit order markets allow limit order traders to submit “hidden” orders (also called “iceberg” or “undisclosed” orders). Liquidity suppliers thus have the possibility to post a quote and either display none or only a fraction of their order’s quantity to the market.

Why are hidden orders allowed?

Purpose of Hidden Orders

Hidden orders can limit the potential hazards of placing large orders by hiding the true volume of demand from other traders.