Dark Pool

A Dark Pool is a private trading venue that takes place outside of regular exchanges. Institutional investors can trade large blocks of stocks or other securities on a Dark Pool without their trades being publicly disclosed. Unlike the public market where all orders and transactions are publicly visible, a Dark Pool allows investors to trade anonymously.

A Dark Pool can offer advantages such as higher liquidity and less market disruption, as large orders do not affect the stock price before the trade is completed. Dark Pools can also offer lower transaction costs as fees are usually lower than on public exchanges.

However, it is also important to note that Dark Pools can pose some risks. Since trades are not publicly disclosed, they may potentially lead to market price distortion when large orders are executed. Additionally, the lack of transparency can result in some investors having an unfair advantage on a Dark Pool by obtaining prior information about certain trades.

Dark Pools are generally not accessible to small investors as they are designed for institutional investors.

Dark Pools are typically operated by large investment banks, hedge funds, or exchanges. Some of the largest operators of Dark Pools include Barclays, Credit Suisse, Goldman Sachs, JP Morgan, and Morgan Stanley. There are also independent Dark Pool operators such as Liquidnet and ITG that act as intermediaries between buyers and sellers. As Dark Pools require specialized infrastructure and technology to facilitate trading, it is usually difficult for small businesses or individuals to operate their own Dark Pools.