DARK POOLS

Dark pools of liquidity (dark liquidity, dark pools or black pools) is trading volume or liquidity not openly available to the retail investor.  They are commonly traded with large block trades (at least 10,000 shares/block) by financial institutions with algorithms using quantitative strategies throughout the day or at scheduled times.

The main advantage in using dark pools is to avoid market impact from the transparency of a large block trade.  Dark pools are run by private brokerages (Barclays, Citi, Credit Suisse, Fidelity, Goldman Sachs, Deutsche Bank, UBS to name a few) which operate under fewer regulatory and public disclosure requirements than public exchanges.  Trading on the dark pools accounts for 32% of trades in 2012 versus 26% in 2008.