RE: Just wondering.4 Jun 2026 21:12
Dark pools, also known as dark liquidity pools, are private alternative trading systems (ATS) where securities are traded outside of public "lit" exchanges like the NYSE or Nasdaq. They allow institutional investors (like mutual funds and pension funds) to execute large block trades without publicly displaying their orders or prices.Why Do Dark Pools Exist?Anonymity: Large investors can buy or sell millions of shares without the broader market knowing their intentions in advance.Minimizing Market Impact: If a massive sell order is placed on a public exchange, it can cause the stock price to panic-drop before the trade is completed. Dark pools prevent this "price slippage" by matching orders privately, often at the midpoint of the current bid-ask spread.Lower Execution Costs: Trades typically do not incur standard public exchange fees and avoid the cost of the bid-ask spread.