What it is
Dark pools are alternative trading systems that allow institutional investors to buy and sell large blocks of securities without publicly displaying their orders. This anonymity helps prevent market impact, where a large order on a public exchange could move the price against the trader before the entire order is filled. Prices in dark pools are typically derived from the public exchange's best bid and offer.
Dark pools are often discussed in the context of market efficiency, transparency, and fairness. News reports may highlight their role in institutional trading strategies, particularly for large block trades. Regulatory bodies scrutinize dark pools to ensure fair pricing and to prevent them from disadvantaging retail investors who trade on public exchanges, especially concerning price discovery and potential for conflicts of interest.
Why it matters
Dark pools impact how large institutional trades occur, potentially influencing market prices and liquidity without immediate public visibility.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice