JARGON: DARK POOLS
Dark liquidity pools, or simply “dark pools”, have been growing in both number and depth over the past several years. The term refers to any share trade conducted directly between investing institutions, such as banks and hedge funds, rather than via a regulated exchange, such as the London Stock Exchange. According to MoneyWeek, the benefit for those involved is secrecy: there is no requirement to publish details of dark pool trades, as there would be in a traditional exchange. Another advantage is the possibility of faster trades and better prices, particularly if the deal is substantial. The downside (at least one of them) is that dark pools make it more likely that those who trade via exchanges/normal routes, including most retail investors, will miss out on the best prices.